ABSTRACT
In the terminology of the literature on international political economy, political capacity refers to a combination of the competence of the government and its degree of autonomy from domestic societal pressures. None of the alternative types of measures of political strength discussed here are free from substantial difficulties of implementation. From a political perspective, if such inefficiency simply reflected a lack of economic understanding by the governments in question, then the use of the structure of taxation as an indicator of political capacity would be problematical. Of course, most policies will contain a combination of both elements, but the proportions are likely to vary greatly across different government expenditures. For advanced economies, decisions to spend and tax less may reflect a government that is more responsive to the interests of the general public and less responsive to special interests. The visibility of direct taxes also gives governments incentives to run budget deficits.
