About This Project

The governments of Lula, Rousseff (Brazil) and Correa (Ecuador) have promoted inclusive policies requiring high public spending levels financed through debt, export revenues and taxes. Tax reforms targeting business and economic elites have met different degrees of success.

How have similar tax efforts generated diverse responses from businesses and elites? How have they impacted inclusive policies' sustainability?

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What is the context of this research?

In 2007, Lula proposed to make permanent the tax on financial transactions then about to expire. Senate voted it out and abolished it. In 2015, Rousseff announced that a tax hike was necessary to avoid 2016 budget’s deficit and a downgrading of Brazil’s debt. She attempted to reintroduce the tax but Congress opposed it fiercely for months.

In 2015, following opaque negotiations, Correa backed-down on a new taxation over inheritance and real estate capital gain which only concerned the wealthiest. These groups have been able somehow to remove the new tax from the agenda despite the fact that Correa has developed a strong, leftist government committed to target business and economic elite for reform.

What is the significance of this project?

The success of tax reform is crucial to sustain Ecuadorean and Brazilian inclusive policies’ model because debt endangers the sustainability of public finances and that export revenues have fallen sharply in the wake of the commodity boom’s end. Both governments are experiencing budget imbalances and in 2015 Dilma Rousseff and Rafael Correa announced austerity policies despite the high political cost of adopting these measures. This turnabout is bringing back political instability in Ecuador where Rafael Correa is struggling with numerous popular protests. In Brazil, economic crisis and fiscal imbalances are resulting in a worsening political crisis which led Congress impeach Dilma Rousseff.

What are the goals of the project?

This work will explore several instances of taxation in order to determine which groups within business and economic elite governments targeted for reform. Then, it will use a combination of interviews, secondary data and process-tracing method in order to describe how targeted groups have reacted and organised in reaction to these taxation efforts. This work will use the framework of Fairfield (2015) in order to identify at which stage of the policymaking process business and economic elite have attempted to resist taxation efforts.

I will conduct interviews in English, Spanish and Portuguese in England, Brazil and Ecuador with key actors of business and economic elite, leaders of business associations, policymakers and relevant academic experts.