The politics of tax reform in Argentina and Mexico

This dissertation examines the process of tax reform implemented in Argentina under Menem (1989--1995), and Mexico under Salinas (1988--1994). Its goal is to identify the political mechanisms that facilitated the enlargement of state fiscal capacity. The existing literature stresses the technical aspects of said reforms while underestimating the importance of political and institutional factors. This dissertation intends to complement current academic literature, taking into account this political facet.;The hypothesis is that Argentina and Mexico's recent success in tax reform was due to a combination of factors: (1) politically astute use of crises to validate the tax reform initiative; (2) strong coalitions supporting tax reform and (3) able to block and/or prevent the formation of opposing coalitions; (4) a legally, economically, technically, and administratively consistent reform package; and (5) consistent macroeconomic policy, which aimed at economic stabilization and the modernization of economic institutions.;This dissertation is organized as follows. Chapter II reviews the literature on tax reform, examines the rise and fall of the state-centered matrix and the role the state apparatus played in the political economy of these countries. It proposes a model of tax reform that includes both political and technical variables. Chapter III analyzes the coexistence of "strong" states in terms of their role as an economic, political, and social actor with "weak" tax systems in terms of their capacity to collect revenue and check noncompliance behaviors. Chapter IV applies the analytical model presented in Chapter II by focusing on five cases of tax reform: under the military Juntas, Alfonsin, and Menem in Argentina, and under Echeverria and Salinas in Mexico. Chapter V further explores the politics of successful tax reform policies under Salinas and Menem. It investigates the role of the dominant actors (hyperpresidents, technocrats, and big business), and secondary actors (unions, Congress, and political parties) involved in tax reform. Chapter VI addresses the limits of tax reform in Argentina and Mexico by reviewing the main technical and political (institutional and structural) limitations. Chapter VII concludes and suggests some topics for future research.