Ideology and Taxation in Latin America

Ernesto Stein and Lorena Caro

No IDB-WP-407, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: This paper examines the impact of ideology on tax revenues in Latin America, using a panel of 17 countries from 1990 to 2010. As a first approach, a fixed- effects model is used to identify the impact of ideology on taxation; left-leaning governments are associated with increases in total tax revenues and income tax revenues of 2. 1 and 1. 3 percent of GDP, respectively. There is no effect on revenues from VAT or social security taxes. To deal with endogeneity problems, an event study and a difference in difference methodology are used to track the behavior of revenues around the time of the shifts to the left. Tax revenues and income tax revenues increase by 1. 5 and 0. 8 percent of GDP when comparing revenues immediately before and after the shift in ideology. The pattern of tax revenues around ideological shifts suggests that the effects are causal.

JEL-codes: H20 P16 (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-acc, nep-lam, nep-pbe, nep-pol and nep-pub
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Citations: View citations in EconPapers (7)

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Journal Article: Ideology and Taxation in Latin America (2017)
Working Paper: Ideology and Taxation in Latin America (2013)
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