Baptists? The Political Economy of Political Environmental Interest Groups

Author(s):  
Todd J. Zywicki
2017 ◽  
Vol 44 (1) ◽  
pp. 2-23 ◽  
Author(s):  
Christian Daude ◽  
Hamlet Gutierrez ◽  
Angel Melguizo

Purpose Tax incentives can be a useful tool to stimulate investment in developing countries. However, interest groups often are able to exert considerable influence in its management, if not its design. The purpose of this paper is to use a power-based approach to the political economy of tax reform to analyse the case of tax incentives for investment in the Dominican Republic. Based on original interviews and a detailed analysis of regulations, the authors study how interest groups work within the institutional framework to seek outcomes that best fit their objectives. However, when unsuccessful, they become powerful advocates of change. These power dynamics have important implications for the design and management of tax incentives in the Dominican Republic and in other developing economies. Design/methodology/approach Case study based on informed interviews with policy makers, lobbyists and researchers combined with statistical and administrative information to test the main hypotheses. Findings While the role of influence groups in creating tax schemes has been widely studied, the authors show that these groups can also have an important role in the administration of the regime and making it more or less open to modifications. The paper shows that the capture of investment incentives has rendered the tax system rigid and unstable in the Dominican Republic, subjecting the public interest hostage to the gain of few. Research limitations/implications Therefore, there is a need to review and reform tax policy, not just from a technical viewpoint, but more importantly altering the political arrangements. More transparency in assessing the impact of these schemes, disclosing information of who has access to tax exemptions and budgeting the tax expenditures can also be tools to increase public control over these instruments. Also, making it more difficult to grant tax incentives, for example by asking for an ex-ante justification and quantification of the externalities supposedly being created would reduce the abuse by power groups of these instruments. Without more balanced and independent leadership, it would be extremely difficult to advance in these fields. Originality/value The literature on the political economy of tax incentives normally focuses on how key actors work around the institutional framework to solve conflict of interests. This paper addresses a complementary – and in the viewpoint equally relevant – aspect of the political economy of tax incentives: once enacted, vested interests have a particular motivation to keep the incentives in place, and therefore the authors should understand how key actors work from within the institutional framework to seek the outcomes that better suit their interests. The analysis focuses on Dominican Republic, based on official data and additional in-depth interviews with policy makers, entrepreneurs and consultants that assist firms with tax and regulation issues.


1980 ◽  
Vol 6 (3) ◽  
pp. 563
Author(s):  
A. Paul Pross ◽  
Fred Thompson ◽  
W. T. Stanbury

2010 ◽  
Vol 26 (2) ◽  
pp. 208-221 ◽  
Author(s):  
Dennis Coates ◽  
Jac C. Heckelman ◽  
Bonnie Wilson

2005 ◽  
Vol 8 (1) ◽  
pp. 183-203
Author(s):  
Soonjae Shin

A growing amount of literature in the political economy suggests that the implementation of an environmental policy is limited due to the complexity of the interests of different interest groups and the political dominance of the polluting industries. This paper examines this insufficient implementation of an environmental concept in the case of the climate policy in the U.S.A., Germany and Japan. The focuses of this analysis are the choice, design and implementation of climate policy instruments in these countries. Starting from the fact that interest groups in the policy-making process prefer different policy instruments, the analysis shows which interests are enforced via which political instrument.


Sign in / Sign up

Export Citation Format

Share Document