Abstract
The contrasts between Chile and Argentina in terms of state autonomy and the quality of their institutions are substantial, as explained in the introduction. Chile’s legalistic culture developed from a strong centralist state, with high initial levels of legitimacy (Bergman 2009. A relatively efficient tax administration (particularly by Latin American standards) acted to reinforce this tax compliance culture. Argentina lacks a state with similar levels of social legitimacy and therefore for any given level of enforcement capabilities, worse tax compliance results. That low level of legitimacy partly stems from a well-grounded perception that the Argentine state has often promoted private interests, rather than the common good. While no one in the Pinochet government tried to obtain personal or group favors from the nation’s tax agency, in Argentina “the DGI became vulnerable to the dictates of the military and later to political appointments” under the democratic Alfonsin government (608). This penetration of the state by particular social groups, coupled with Argentina’s high level of politico-institutional instability (see chapter seven), has yielded a relatively inefficient (and corrupt) tax administration. Its enforcement capabilities have, not surprisingly, been much weaker than those of its Chilean counterpart. Tax noncompliance by Argentine citizens has been regularly rewarded by an absence of sanctions (including frequent tax amnesties), further consolidating a weak tax culture.
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Notes
Cavallo would later declare: “Tacchi conceives of this issue as a matter of principles. He considers that there are legislative initiatives that we have not vetoed for political reasons which are perforating the tax base and eroding efficiency in the battle against evasion” (Clarin., August 2, 1995). Indeed, Tacchi, in his zealous pursuit of evaders, was not willing to compromise because of political concerns or political timing. His abrasive personality, personal inflexibility, and his outspoken nature—including direct allegations involving cabinet members—increasingly created a tense political standoff between the Federal Tax Bureau and Menem’s trusted political operatives. Tacchi’s intuition that, in the long term, he was involved in a losing political battle is very likely to have prompted his resignation, as many analysts coincided in pointing out. His utter lack of political and interpersonal skills certainly contributed to his undoing. Yet, he had an independent source of political capital insofar as he was regarded very highly by Argentines generally, who saw him as an unusually honest and high-principled figure. (In fact, the Ucede party seriously entertained the prospect of postulating Tacchi for mayor of Buenos Aires.)
Economist Carlos Perez (Banco Quilmes) summed up the gist of these objections well: “I think it is dangerous to think that the problem is unidimensional and has to do with fiscal equilibrium. [It is dangerous] to ignore the level of economic activity. If the fiscal deficit is reduced only via greater tax pressure we would be looking at the economic picture only from a static viewpoint, not from a dynamic perspective” (La Nació., August 12, 1996).
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© 2011 Omar Sanchez
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Sanchez, O. (2011). Argentine Tax Policy under Menem I (1989–1994): The “Tax Revolution”. In: Mobilizing Resources in Latin America. Palgrave Macmillan, New York. https://doi.org/10.1057/9780230119659_4
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DOI: https://doi.org/10.1057/9780230119659_4
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