The politics of taxation in Central America

Abstract

How do dictators take decisions on tax policy? Building on the basic intuitions of “theories of political survival”, this thesis offers an argument to account for tax-policy variation in authoritarian Central America. By focusing on instances of major tax reforms during the second half of the 20th century, this thesis draws links between reform outcomes and coalitions supporting authoritarian governments in Guatemala, Honduras and Nicaragua. Broad-based coalitions enabled governments to establish progressive taxation in the form of income, property and agricultural-exports taxes. Narrow coalitions, by contrast, translated into the pre-eminence of regressive taxes exempting elites and targeting consumers at large. Case studies show how regime change, and the associated shifts in the composition of supporting coalitions, was conducive to some traceable changes in the orientation of tax policies. A comparative research design allows ruling out alternative explanatory factors