Coordination and Tax Politics

Abstract

Business interests groups are crucial actors for tax policy-making, but it is still unclear under which conditions they are more successful than politicians in shaping taxation. This article argues that centralized coordination and high-levels of policy integration make business interest groups more influential in the tax policy-making process. If there is no ideological convergence between agenda-setters and business, highly centralized, and well-integrated business interest groups are more successful in blocking or softening revenue-raising tax reforms, or simply transferring tax burdens to consumers or non-organized citizens. To evaluate this theoretical framework, I have compiled an original data set on business groups and associations for 18 countries in Latin America between 1990 and 2010. This theory uncovers a strong link between the patterns of business coordination and the feasibility of implementing distributive tax policies. This article also contributes to the study of business politics beyond the limited sample of developed countries.