This paper explores the relationship between socio-political institutions and tax compositions in developing countries. Based on a fiscal contractualism approach it argues that strong business organizations and political party systems reduce the uncertainty of fiscal contracts for economic elites. The decrease of uncertainty leads elites to accept higher tax contributions, which governments then collect using progressive tax types more intensively. As a result, stronger business organizations and political party systems should be connected to tax compositions characterised by higher relevance of progressive taxes. To illustrate and substantiate this claim I provide evidence from a comparative analysis of the Peruvian and the Colombian tax history between 1970 and 2010.
