Taxation, State Capacity, and Accountable Rule

The collection of taxes has throughout history been one of the most central, and yet one of the most difficult, social and political enterprises conducted by states. Effective taxation can serve to create an important bond between citizens and their government and is a significant component of attracting private investment. Taxation is moreover a central component of distributive politics, and has been argued to play a decisive role in the fostering of accountable and legitimate rule (Lieberman 2003; Tilly 1990). However, taxation is more than a means to achieve other outcomes. It is commonly argued that there is no better measure of a state’s reach and legitimacy than its ability to collect taxes. This idea is tightly linked to fiscal contract theory, which holds that we should expect taxation to constitute a significant and important part of the social contract between the citizens and the state (Barlow & Peña 2021; Beach 2018; Berens & von Schiller 2017; Campbell 1993; Hassan & Prichard 2016; Rakner 2017). Historically and in those parts of the world that host today’s industrialized countries, taxation was very much the outcome of coercion and bargaining processes that took place solely between national populations and their governments. This picture has changed, however. Contemporary governments worldwide realize that their degrees of freedom in shaping their domestic revenue system have been reduced. While they are still being held responsible for finding the right balance between ‘fair’ taxation and effective public service delivery, they are exposed to new types of challenges. These challenges include new business models and dynamics in global economic transactions, spillovers arising from unilateral decisions of governments or powerful private sector companies, and domestic political lock-ins, which produce unfair, uneven and inefficient tax systems (OECD 2018; von Haldenwang 2020). While all governments are exposed to these dynamics, developing countries are often particularly challenged in dealing with them. Factors such as limited state capacity, lack of public infrastructure, and weak patterns of world market integration play an important role here. Many tax authorities in low- and middle-income countries are in addition challenged by an environment characterized by low levels of legitimacy, high levels of corruption, political interference in taxation, and autocratic manipulation of information. As a consequence, raising the certainty of taxation and lowering compliance costs for taxpayers have become key elements of domestic governance in the developing parts of the world, with the introduction of new models of tax administration and collection, including the establishment of semi-autonomous revenue authorities (Dom 2018; Fjeldstad & Moore, 2009). With the importance of well-functioning taxation as a backdrop, this workshop seeks to bridge recent debates on the behavioral aspects of taxation with approaches to tax bargaining, fiscal contractualism, state capacity, distributive politics, and the legitimation of political regimes – at the domestic as well as international scale. It seeks to drive academic progress by linking these debates to new insights on taxation and tax compliance, new tendencies in globalization and digitalization, and new approaches to the study of accountable and legitimate rule.