This chapter shows how business unity and coordination could be crucial factors in explaining the persistence of tax regressivity in Latin America. Specifically, this chapter argues that recent business unity and coordination patterns in the region prevent the adopting of progressive tax structures. This argument has important implications for understanding how distinctive varieties of capitalism make reducing inequality more challenging.
On the one hand, this chapter shows that highly coordinated business communities can deliver effective lobbying strategies to stop structural tax reforms and transfer the tax burden to less-organized citizens – i.e., the middle class and the poor. On the other hand, it shows evidence that different patterns of business coordination shape policymakers' trade-offs between more- or less-progressive tax policy tools. Finally, this chapter suggests that inter-sectoral and inter-firm conflicts (for example, conflicts of interest between large firms and SMEs) could open windows of opportunity for introducing more progressive tax structures.