Resistance Without Revolt: Shaping a Tax Culture in Modern Argentina, 1930–1955

Most of the studies on the fiscal history of Argentina (and Latin America), focus on economics, dealing with such issues as the impact of fiscal policies on growth, economic performance, and so on. However, we need to know more about the social and political implications of tax policies for Argentina in the twentieth-century.¹ Between the 1960s and the end of the century, Argentina went through a period of political violence, a brutal dictatorship, increasing social inequalities, an episode of hyperinflation in the early 1990s, and an international default in 2001. This long crisis of the Argentine state was both a fiscal crisis and an implosion of the social pact. Both phenomena, fiscal crisis and the unraveling of the social pact, had their roots in a previous period in which emerged a culture of distrust for tax policies and the legitimacy for the noncompliance with tax obligations.

My goal in this article is to explore how this culture of noncompliance was shaped in the first half of the twentieth century. Martin Daunton, in his well-known two-volume history of taxation in Britain, argues that the state must create specific mechanisms that encourage the trust of the citizens in order to make a tax system work. Two keys in this process are the concepts of legitimacy and justice (both obviously connected).² Usually, most people do not pay taxes with enthusiasm. However, this does not mean that coercion is the only way to collect money from taxpayers. In fact, if taxpayers believe that the tax system is fair and legitimate, it easier for the ruler to obtain what Margaret Levi refers as “quasi voluntary” cooperation of the taxpayer.³ However, the perception of fairness and legitimacy in a system is difficult to achieve. Taxpayers must consider that their authorities have the right to impose and collect taxes, that those taxes are fair and that no one is avoiding the payment. Moreover, as the Argentine case demonstrates, once these perceptions began to crumble, it became extremely difficult for the authorities to gain anew the trust of the citizens and their quasi-voluntary cooperation.

The extension of distrust toward rulers and taxes might in turn create a pervasive atmosphere of societal approval for nonlegal behaviors, such as tax evasion or fraud. This is what in this article I refer to as a culture of noncompliance. The concept of a culture of noncompliance should not be understood in a strictly cultural sense. That is, a culture of noncompliance is not the result of some permanent cultural traits of a society, but the product of the development of some historical problems and the way in which institutions were shaped and evolved. Therefore, even if this article discusses the idea of a tax culture, my perspective is closer to an institutional than a cultural one.⁴

My analysis begins in the decade of 1930, when the Argentine tax scheme was overhauled. The old nineteenth-century system based upon the preeminence of taxes on international trade was replaced by new complex tax devices including an income tax and a sales tax. During the 1940s, this system became increasingly complex and progressive. This transformation was to some extent successful, although tax revenues were never enough to match the necessities of the Treasury. This was a crucial moment in the history of Argentine taxation because the new taxes meant a more direct relationship between rulers and taxpayers. In this moment, the institutions built to collect and manage taxes should have (re)gained citizens’ trust, but this process coincided with a politically unstable period. Therefore, even if tax collection was successful in the short run, Argentine authorities were less successful in creating the institutional setting amenable to build lasting relations of confidence between citizens and the state and among citizens themselves. In turn, this created a culture of noncompliance that eroded the Argentine tax system in the second half of the century and contributed the inflationary surges and the undermining of welfare policies.

After 1934, Argentine taxpayers did not directly challenge their tax system, preferring the...