Description
Prohibitively expensive access to international finance, unsustainable debt burdens and the consolidation of a post-development-aid world means that it has never been more important for countries across the Global South to raise more revenue domestically through taxation—Domestic Resource Mobilisation (DRM)—than it is now. However, increasing DRM remains a major challenge for governments struggling with high levels of domestic informality, tax evasion, and international profit shifting. Under-taxation is emblematic of economies across the Global South, and evasion and informality are particularly acute in Latin America. Since the turn of the millennium there have been a range of policies implemented by Latin American governments to build a bridge into the informal economy, to try and formalise the informal, to support DRM. We engage with one of these policies, the Monotributo or Mono Tax in Argentina: a policy designed for informal sector workers to contribute a nominal amount to the Argentine state in return for access to social security, which registered 2.9 million taxpayers by 2023. The recent abolition by President Milei of the Montributo’s entry level for the most precarious workers, we argue, is less about cost saving for social security but more about ideology and social politics related to informality. Drawing evidence from extensive fieldwork conducted in Buenos Aires in 2019 and 2023 and supported by qualitative online questionnaires, this study argues that ideologies of taxation and partisan affiliation significantly shape social attitudes to informality in Argentina. We argue that informality is seen by some as a de facto tax subsidy which can shape opposition to schemes designed to permeate into the informal sector whilst exacerbating deep political cleavages and causing barriers to DRM. In doing so, we make a novel contribution to international political economy debates by bringing into conversation literatures on informality, taxation, and ideology.
