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Party Finance in Latin America  

Kathleen Bruhn

Modern representative democracy cannot function without political parties, however rudimentary. Parties in turn cannot function without money. The subject of party finance is therefore central to the construction of contemporary democracies. Latin American countries have attempted to meet the challenges of preserving democracy while providing for political parties across three main areas of financial regulation: provision of public finance, regulation of private finance, and limiting campaign spending. In all three areas, transparency (reporting), oversight, and enforcement of existing legal regulations remain important problems for the health of the political system. In the late 20th century, Latin American countries increasingly turned to public finance as a way of supplementing existing systems of private contributions. This trend seems to have been inspired both by a desire to reduce the inequalities inherent in Latin America’s socioeconomic structure and by efforts to contain and prevent episodes of scandal and undue influence generated by private contributors. Public finance particularly benefits small parties and parties with fewer connections to the wealthy sectors that tend to dominate private contributions. Public finance may contribute to the institutionalization of both party organizations and party systems, but it may also weaken the dependence of parties on their members and supporters in ways that undermine representation. Private finance in Latin America remains largely obscure. We know that relatively few private donors account for the lion’s share of party donations, but it is unclear in many cases exactly who donates, or what their money buys. It is therefore difficult for voters (and analysts) to determine the structure of party obligations to donors and to hold parties accountable. Partly as a result, drug money is believed to have penetrated the political systems of many Latin American countries, especially but not exclusively at the local level. Campaign spending limits, including limits on the duration of campaigns and campaign advertising, have been employed in some cases to try to contain costs and thus reduce the incentives of parties to seek out private donations, especially of questionable origin. Lax enforcement, however, limits the impact of these initiatives.



Ryan J. Tonkin

Taxation is perhaps the most important mechanism for realizing a conception of distributive justice. It also confronts citizens with the coercive power of the state in an immediate way. Yet there exists no widely accepted theory of tax justice. This is partly explained by the protean character of modern taxation: taxes allocate resources, create incentives, fund public goods, address collective action problems, and more. As well, claims about fair taxation always implicate technical and practical considerations alongside their normative dimensions. Historically, experts in the technical and practical (such as economists and policymakers) have more readily engaged this tangle of considerations than experts in normative theory (such as philosophers), although that is beginning to change. The results of the engagement are fragmentary and often inconsistent. However, the fragments can be roughly sorted into two broad approaches to questions of tax justice. The first approach assesses taxation as an institutional interference with a pretax allocation of resource entitlements. It conceives of the collective tax burden as a social invoice that must be fairly distributed across that pretax allocation. Thus, various principles of distribution follow: the tax burden should be distributed according to ability to pay, or benefits received, and so on. But the second approach argues that the project of fairly distributing the tax burden is misconceived for two reasons. First, it is myopic in its assessment of particular taxes without considering how those taxes fit within the broader institutional arrangement. Second, it presumes an existing allocation of resource entitlements with which taxes interfere. In a modern state, however, taxes are antecedent to, and so already presumed by, any allocation of entitlements. Instead of attending to a fair distribution of an illusory tax burden, the second approach conceives of taxation as constructive social architecture. Accordingly, it holds that taxes should be assessed in terms of their contribution to a distribution that satisfies the appropriate principles of justice, whatever those principles may be.