Demand-side Challenges to Building Direct Taxation in Developing Economies: Evaluating the Potential of Informality in Redressing Low Tax Burdens of Latin America and the Caribbean.
In the developing world, tax structures are often regressive, the tax base is typically narrow, and tax burdens are, on average, much lower than OECD nations. Not only are low tax burdens associated with larger informal economies; progressive tax reform is found to be inhibited by structural labour informality. Accordingly, low- and middle-income economies with sizeable informal economy face serious problems in funding robust provision of public goods which is key to the reduction of inequality and equitable growth. To break out of this socially and economically damaging equilibrium, policymakers must find solutions to building long-term fiscal capacity. Latin America and the Caribbean (LAC) is a mix of broadly middle-income economies with modernized tax administration capabilities and yet it is still beleaguered by sizeable informal economies. The region is ideally positioned to lead the way in finding lasting solutions to persistent informality, unlocking progressive tax reform and increasing overall tax capacity through direct means.
Although there is a fairly established literature dedicated to understanding what individuals in the region want in terms of state social expenditure, it remains unclear as to how revenues will match the needs of the state to redistribute accordingly. This thesis incorporates informal economy more forthrightly in the discussion on individual preferences for taxation by evaluating the potential of informality to bolster direct tax capacity. Where most of the data available come from large comparative surveys that do not properly capture preferences of informals, this work also reconceptualises the informal-state relationship – in line with contemporary behavioural frameworks – by measuring receptiveness of informals to tax initiatives that sit in different dimensions of fiscal exchange. Through a combination of comparative and experimental design, I firstly intend to evaluate a number of contending LAC tax morale hypotheses that may or may not account for individual-level variation of informal tax morale. Secondly, I aim to unpack and develop the hypotheses that do account for this variation. These findings can help to sharpen fiscal policy design prescriptions in the pursuit of strengthening the informal-state fiscal contract and formalising this vast sector of the labour market.
Awards, grants, scholarships, funding
UCL Grand Challenges Doctoral Students' Small Grants (2021) for joint research project: 'Can Times of Crisis Strengthen ‘Blind Spots’ in Social Provision? Re-evaluating the Relationship Between Informal Workers and the State in Colombia'
Prizes and commendations
Place to study at the competitive School on Latin American Economies of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC, or CEPAL in Spanish) - early 2021 but postponed due to COVID19 crisis.
AMER0039: Introduction to Politics
AMER0053: Research Methods (Quantitative)