The Politics of Tax Avoidance

: Lessons from Chile, 1990-2014

Abstract

Between 1990 and 2014 tax avoidance expanded in Chile despite the fact that governments deployed an important legislative agenda to control it. This thesis studies the effect of two central actors in this expansion: the bureaucracy in charge of interpreting the law and the law and auditing firms who create tax avoidance schemes. Drawing on an extensive literature on bureaucracy and elite power, and using oligarchic theory in particular (Winters, 2011), this thesis argues that tax avoidance has largely been co-constructed by bureaucrats and tax lawyers. The legality granted by the bureaucracy was essential for the lawyers to be able to sell these schemes without putting their clients at risk and was key to the transformation of avoidance into an asset firms could sell in the 2000s. The thesis explains the circumstances that fostered this public-private coordination and allowed these actors to occupy an intermediate space between the legislature and the judiciary, taking attributions from both and generating an interpretative power. This power was very stable for two decades and was only destabilised when the political authority tried to carry out redistributive policies as a consequence of considerable social pressures.
The thesis uses the case study method (Gerring, 2017) complemented with various tools of comparative historical analysis, including process tracing (Collier, 2011; George & Bennett, 2004; Gerring, 2017). To answer the research questions, three circumvention schemes deployed in the 1990s that resulted in large losses to the public treasury are studied in depth. The research was based on 25 in-depth semi-structured interviews with public officials, politicians, lawyers and accountants, as well as the use of primary documents, parliamentary debates, documents recording the history of the laws and press articles. The evidence obtained allows us to unpack a causal mechanism that explains the expansion of tax avoidance and allows us to test some of the central arguments.

Date of Award	7 May 2024
Original language	English
Awarding Institution	University of Bristol
Supervisor	Magnus Feldmann (Supervisor) & Mircea Popa (Supervisor)