Ideology and taxation in Latin America

Ernesto Stein and Lorena Caro

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper examines the impact of ideology on tax revenues in Latin America, using a panel of seventeen countries from 1990 to 2010. As a first approach, a fixed-effects model is used to identify the impact of government ideology on taxation; left-leaning governments are associated with increases in total tax revenues and income tax revenues of 2.2 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 methodology is used to track the behavior of revenues around the time of the shifts to the left. A comparison of revenues immediately before and after the shift in government ideology shows that revenues and income tax revenues increase by 1.3 and 0.8 percent of GDP. JEL Classifications: H20, P16

Keywords: ideology; taxation; event study (search for similar items in EconPapers)
JEL-codes: H20 P16 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2017-04-01
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Published in Economía, 1, April, 2017, 17(2), pp. 1 - 27. ISSN: 1529-7470

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