The global financial crisis exposes the need to take a fresh look at the politics of taxation. Current international orthodoxy would have it that governments should not increase taxes. They should manage public finances through downward pressure on spending, because markets impose limits on states’ revenue-raising efforts.
However, the ‘new fiscal sociology of the state’ prompts us to take a long view of historical and cross-national variations in tax policy (Martin, Mehrotra, & Prasad, 2009). There may be multiple equilibria in the tax-spending mix. The tax system is not only the product of technical decision, but is profoundly shaped by political and social interests. Consistent, effective, and equitable tax policy implementation and tax compliance cannot always be assumed.
Tax policy, in other words, is deeply political. Who pays tax, and how much they pay, is at the heart of politics itself. And yet we know relatively little about the underlying politics of taxation.
This Workshop brings political science and political economy perspectives to bear on the analysis of taxation. The aim is to identify the key analytical and methodological challenges, and to consider how these can be addressed. Key questions include these:
1. How have governments responded to the political challenge of funding the state in the last decades, in both good and bad times? What accounts for variation in the balance struck between tax and spending?
2. How can we best explain variation in the composition and distributive consequences of different tax mixes? What is the role of interests, institutions and ideas in shaping the evolution of tax policies?
3. Do markets impose limits to the state’s capacity to extract revenues from society – is there a limit to the ‘tax state’?
4. Why is tax implementation more problematic in some countries than others? How is tax compliance best explained?