Political Regimes and the Extractive Capacity of Governments: Taxation in Democracies and Dictatorships

Abstract

350WORLD POLITICS methodologically flawed since they rarely take into consideration, among other things, the effect of performance on regimes. 1 In view of the inconclusive results produced by empirical analyses, several authors have recently suggested that the category "political regime" is too broad and should be disaggregated for analytical purposes. 2 Although it is undoubtedly important to consider political factors other than regime type to explain variations in policy performance across countries, it is too early to discard questions about the impact of political regimes from our research agenda. After all, the effect that political regimes may have on economic performance still challenges us empirically, theoretically, and politically.This article assesses whether political regimes matter for a particular aspect of economic performance. Specifically, it addresses the question of whether regime type, classified as democracy or dictatorship, has a causal impact on the extractive capacity of a government, as measured by the level of taxes it collects. The fiscal crisis experienced by several countries in the recent past has led many analysts to doubt the capacity of those countries to raise revenue through taxation. For many observers, the resumption of economic development requires an increase in levels of public savings, which, in turn, requires an increase in taxation. 3 Yet, the capacity of governments to raise taxes, particularly under democratic conditions, is normally considered to be limited.

The Spatial Dimensions of State Fiscal Capacity The Mechanisms of International Influence on Domestic Extractive Efforts

“…Unfortunately, this data is just not available for most countries. The total tax take represented by the tax ratio is often the only available measure, and has become the standard in the predatory theory literature (Campbell 1993;Cheibub 1998;Thies 2005Thies , 2010 6 We treat a state as democratic if it has a score of 7 or greater on the Polity2 variable of the Polity IV dataset. To separate democracies into presidential or parliamentary, we rely on Banks' measure of whether a president or member of the legislature operates as the head of government.…”

“…There are some standard indicators related to transaction costs found in most empirical studies, such as per capita income, trade openness, inflation, and agriculture as a percentage of GDP. The former two measures are thought to increase state revenues since they reduce transaction costs, while the latter two measures should reduce revenues since they increase transaction costs (Cheibub, 1998). However, other factors, such as religious and ethnic fractionalization also implicate transaction costs, since extraction from homogeneous societies is presumed to be simpler than heterogeneous ones (Thies 2010).…”

A Democratic Rentier State? Taxation, Aid Dependency, and Political Representation in Benin

“…Quantitative empirical research has reached contradictory conclusions, with some scholars finding that democracies collect more taxes than nondemocratic states (Boix 2001;Thies 2004: 65), others that democracies collect as many taxes as autocracies (Cheibub 1998;Schmitter et al 2005: 8), and others that democracies collect fewer taxes (Mulligan, Sala-i-Martin and Gil 2004). However, general quantitative indicators, such as the tax ratio (government revenues as a share of GDP), are not as significant if one looks at taxation from a statebuilding point of view (Brautigam 2008;Lieberman 2002).…”

O leviatã brasileiro e a esfinge argentina: os determinantes institucionais da política tributária

“…Em contraposição, as democracias tenderiam a exibir níveis mais elevados de taxação. Cheibub (1998), no entanto, em um abrangente estudo comparativo argumenta que não há relação causal entre o tipo de regime e a capacidade extrativa dos governos. 13 Como essa explicação dá conta das divergências entre Brasil e Argentina?…”