This book explores the politics of fiscal authority, focusing on the centralization of taxation in Latin America during the twentieth century. The book studies this issue in great detail for the case of Mexico. The political (and fiscal) fragmentation associated with civil war at the beginning of the century was eventually transformed into a highly centralized regime. The analysis shows that fiscal centralization can best be studied as the consequence of a bargain struck between self-interested regional and national politicians. Fiscal centralization was more extreme in Mexico than in most other places in the world, but the challenges and problems tackled by Mexican politicians were not unique. The book thus analyzes fiscal centralization and the origins of intergovernmental financial transfers in the other Latin American federal regimes, Argentina, Brazil, and Venezuela. The analysis sheds light on the factors that explain the consolidation of tax authority in developing countries.
Author(s): Alberto Diaz-Cayeros
Series: Cambridge Studies in Comparative Politics
Edition: 1
Publisher: Cambridge University Press
Year: 2006
Language: English
Pages: 302
Cover......Page 1
Half-title......Page 3
Series-title......Page 5
Title......Page 7
Copyright......Page 8
Dedication......Page 9
Contents......Page 11
Figures......Page 13
Tables......Page 15
Preface......Page 17
Federalism, Fiscal Authority, and Centralization in Latin America......Page 21
1.1. The Fundamental Dilemma of Fiscal Centralization......Page 23
1.2. Fiscal Centralization around the World......Page 24
1.3. Federalism, Political Parties, and Fiscal Authority......Page 32
1.4. The Federal Bargain: Delegation and Commitment......Page 35
1.5. Time Inconsistency Exacerbating the Commitment Problem......Page 41
1.6. Redistribution......Page 43
1.7. The Latin American Federations and Fiscal Centralization......Page 49
1.8. Plan of the Book......Page 52
Appendix to Chapter 1......Page 54
PART I Fiscal Centralization in Mexico......Page 57
2.1. Taxation, Federalism, and the Dilemma of Regional Development......Page 61
2.2. The Mexican Fiscal System after the Revolution......Page 63
2.3. Explaining the National–Local Cleavage in the First National Tax Convention......Page 71
2.4. Collective Action and Social Choice in a Federal Bargain......Page 86
2.5. Commitment and Failed Fiscal Coordination......Page 93
3.1. Party Politics and Regional Fragmentation......Page 96
3.2. Parties as Institutional Solutions to Ambition, Collective Action, and Social Choice......Page 98
3.3. Political Ambition and the Founding of the Regional Party......Page 100
3.4.1. Corporatism Triumphant......Page 105
3.4.2. Developmentalism......Page 107
3.4.3. The Reorganized Corporatist Party......Page 108
3.5. Nominations and Control of Electoral Processes......Page 109
3.5.1. Staggered Electoral Calendar......Page 110
3.5.2. State Politics......Page 111
3.5.3. Local Politics and Bossism......Page 113
3.6. The Hegemonic Party and Fiscal Authority......Page 114
4.1. Stability in Political Ambition......Page 120
4.2. The Conventional Wisdom......Page 121
4.3. A Spatial Model of Gubernatorial Nomination......Page 125
4.4. Evidence Drawn from Governors’ Ideological Positions......Page 133
5.1. The Consequences of Centralization......Page 145
5.2. Tax-Sharing Agreements and the Rise of Participaciones......Page 147
5.3. Discretion in Federal Public Investment in the States......Page 156
5.4. The Distribution of Revenue-Sharing across States......Page 161
5.5. Democracy and Fiscal Federalism......Page 165
PART II Centralization and Revenue-Sharing in the Latin American Federations......Page 171
6.1. The Abdication of Fiscal Authority......Page 179
6.2. The Venezuelan Fiscal Pact......Page 180
6.3. Oil, Federal Transfer Shirking, and the Loss of Federalism......Page 183
6.4. Democracy and Federal Compliance......Page 188
6.5. Statistical Analysis of the Evolution of Revenue-Sharing......Page 191
6.6. The Distribution of Revenue-Sharing among States in Venezuela......Page 196
6.7. Recent Developments......Page 200
7.1. Coalition Formation in the Midst of Instability......Page 202
7.2. The Argentine Fiscal Pact......Page 205
7.3. The Fiscal Bargain......Page 208
7.4. Revenue-Sharing under Perón......Page 213
7.5. Authoritarianism and Shirking of Revenue-Sharing Promises......Page 217
7.6. Statistical Analysis of the Evolution of Revenue-Sharing......Page 221
7.7. The Distribution of Revenue-Sharing among Provinces in Argentina......Page 224
7.8. Recent Developments......Page 229
8.1. Resilient Federalism......Page 232
8.2. Strong States and the Retention of Fiscal Authority......Page 234
8.3. Origins: The Politics of the States......Page 237
8.4. Authoritarianism and Revenue-Sharing......Page 241
8.5. Statistical Analysis of the Evolution of Revenue-Sharing......Page 244
8.6. Redistribution in the Brazilian Federation......Page 246
8.7. Federalism, Fragmentation, and the “Fiscal War”......Page 250
9.1. Nation-Building......Page 254
9.2. Fiscal Politics and Tax Structure......Page 262
9.3. Federalism, Decentralization, and Redistribution......Page 265
References......Page 271
Index......Page 291
