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The Political Economics of Tax Reform in Chile

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  • Leonardo E. Letelier S.
  • Mireya D�vila A.

Abstract

This paper explores the political economy at the time of the 2012 tax reform, which paved the way for a radical tax increase in 2014. Both were an explicit response to demands to improve public education. As opposed to the 2014 reform, the 2012 tax adjustment was an unplanned decision made in the wake of a pact of long-term fiscal stability during the government's last year in office and was partially negotiated with student associations and pressure groups. We hypothesise that the existing institutions were not strong enough to meet emerging social demands through formal channels. We will show evidence for the hypothesis that the government's incorporation of students' demands in its agenda was mainly a response to the role of the media, the fact that it is not difficult for students to organise themselves and express their demands, the support of students' families and the ruling government's fear of missing out on a second term in office.

Suggested Citation

  • Leonardo E. Letelier S. & Mireya D�vila A., 2015. "The Political Economics of Tax Reform in Chile," New Political Economy, Taylor & Francis Journals, vol. 20(6), pages 832-850, December.
    • Handle: RePEc:taf:cnpexx:v:20:y:2015:i:6:p:832-850
    DOI: 10.1080/13563467.2015.1041475
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    References listed on IDEAS

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    1. -, 2013. "Fiscal Panorama of Latin America and the Caribbean 2013: tax reform and renewal of the fiscal covenant," Libros y Documentos Institucionales, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 3101 edited by Eclac.
    2. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926, April.
    3. Carlos Scartascini & Pablo T. Spiller & Ernesto H. Stein & Mariano Tommasi & Lee J. Alston & Marcus André Melo & Bernardo Mueller & Carlos Pereira & Cristóbal Aninat & John Londregan & Patricio Navia , 2011. "El juego político en América Latina: ¿Cómo se deciden las políticas públicas?," IDB Publications (Books), Inter-American Development Bank, number 42118 edited by Carlos Scartascini & Pablo T. Spiller & Ernesto H. Stein & Mariano Tommasi, February.
    4. repec:idb:brikps:42118 is not listed on IDEAS
    5. repec:idb:brikps:40358 is not listed on IDEAS
    6. Scartascini, Carlos & Spiller, Pablo T. & Stein, Ernesto H. & Tommasi, Mariano & Alston, Lee J. & Melo, Marcus André & Mueller, Bernardo & Pereira, Carlos & Aninat, Cristóbal & Londregan, John & Navia, 2011. "El juego político en América Latina: ¿Cómo se deciden las políticas públicas?," IDB Publications (Books), Inter-American Development Bank, number 332, November.
    7. Carlos Scartascini & Ernesto H. Stein & Emmanuel Abuelafia & Sergio Berensztein & Miguel Braun & Luciano Di Gresia & Lee J. Alston & Marcus André Melo & Bernardo Mueller & Carlos Pereira & Mauricio Cá, 2009. "Who Decides the Budget? A Political Economy Analysis of the Budget Process in Latin America," IDB Publications (Books), Inter-American Development Bank, number 87294 edited by Mark Hallerberg & Carlos Scartascini & Ernesto H. Stein, February.
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    Cited by:

    1. Castillo, Emilio & Hancock, Kathleen J., 2022. "Multiple streams framework and mineral royalties: The 2005 mining tax reform in Chile," Resources Policy, Elsevier, vol. 77(C).
    2. Leonardo Letelier S & Hector Ormeño C, 2018. "Education and fiscal decentralization. The case of municipal education in Chile," Environment and Planning C, , vol. 36(8), pages 1499-1521, December.
    3. Castillo, Emilio, 2021. "The impacts of profit-based royalties on early-stage mineral exploration," Resources Policy, Elsevier, vol. 73(C).

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