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Democratic Deepening and State Capacity: Taxation in Brazil and India

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The Politics of Domestic Resource Mobilization for Social Development

Part of the book series: Social Policy in a Development Context ((SPDC))

Abstract

Changes to citizenship regimes help explain differences in tax structure in Brazil and India. Citizenship regimes change by mobilizing new collective identities, articulating substantive demands, and institutionalizing group linkages to public life. When excluded groups mobilize and gain access, they provide new sources of state legitimacy, allowing states to expand their capacity, for example in tax. Changes to tax can be evaluated in terms of levels of revenues, degrees of progressivity, and the universality of application of tax across sectors and regions. Since the 1970s in Brazil and India, excluded groups gained access to citizenship regimes and deepened democracy, but differences in collective identities, demands, and mechanisms of linkage played out in differences in state capacity.

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Notes

  1. 1.

    Calculations by Fenochietto and Pessino (2010) estimate Brazil taxes 98 per cent of what would be possible given its level of development and other characteristics.

  2. 2.

    Without incidence data from both countries, it is difficult to compare the degree of progressivity in the overall fiscal impact. Still, some trends are evident. Gini coefficients in Brazil were relatively flat during the 1990s at around 60 and fell to 54.69 in 2009 and to 51.3 by 2015. In 2016, they began to rise again, to 53.7, settling at 53.3 in 2017. In India, while data is less complete, they began at 30.82 in 1994 and have risen ever since, reaching 33.38 in 2005, 33.9 in 2010, and 35.7 in 2011 (World Bank).

  3. 3.

    Neither the OECD nor the World Development Indicators (WDI) database show figures for India anymore, though they used to indicate that 0.32 per cent of revenues came from social contributions. The most recent available data can be found at https://tradingeconomics.com/india/social-contributions-current-lcu-wb-data.html.

  4. 4.

    Some estimates place the number as high as 93 per cent of non-farm employment in India (Kumar 2017), as compared to 42.2 per cent in Brazil in 2009, a rate that has fallen considerably since 2000, when it was over 60 per cent.

  5. 5.

    The articulation of such demands and organizational efforts eventually birthed a New Union Movement joining urban worker struggle to neighbourhood and other popular movements (Seidman 1994).

  6. 6.

    Fund for the Maintenance and Support of Basic Education (Fundef) and Unified Health System (SUS) and conditional cash transfer—Bolsa Escola.

  7. 7.

    USD 150 in 2002 to USD 300 in 2012.

  8. 8.

    Though there has been a slight increase to 53.7 in 2016, settling at 53.3 in 2017 (World Bank n.d.).

  9. 9.

    These institutions included allocation mechanisms that targeted working-class neighbourhoods in the redistribution of resources, “inverting priorities” that had long been dominated by elites (Avritzer et al. 2003), and participation among the poor tended to be higher than among the wealthy (Goldfrank 2011).

  10. 10.

    See Desai et al. (2015), Ministry of Rural Development (2012) and NIC (2019).

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  1. Josef Korbel School of International Studies, University of Denver, Denver, CO, USA

    Aaron Schneider

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    Katja Hujo

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Schneider, A. (2020). Democratic Deepening and State Capacity: Taxation in Brazil and India. In: Hujo, K. (eds) The Politics of Domestic Resource Mobilization for Social Development. Social Policy in a Development Context. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-37595-9_6

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