Argentine Tax Policy under Menem I (1989–1994): The “Tax Revolution”

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.