From Poverty to Power Green, Oxfam 2008 - weman

2 POWER AND POLITICS I RULE, THEREFORE I AMlogic that VAT is easier to collect, especially when many workers andproperties are in the informal economy, has led to poor people payingmore than their fair share. Such regressive taxation may help explainthe persistence of Latin America’s stark inequality – or perhaps,conversely, it points to an ongoing lack of political consensus in deeplydivided societies. The shift to VAT at the behest of aid donors is likelyto make taxation more visible as a political issue over the comingyears, as is the growth of civil society scrutiny of government spending.South Africa, remarkably, has maintained both a high tax takeand a high proportion of socially progressive income and corporatetaxation through the transition from apartheid to majority rule. Thecountry collects over three times as much income tax as Brazil – a signof an underlying ‘culture of compliance’ by business and white elites,despite the political turbulence of the past 20 years.Chile’s progressive tax system resulted from a unique pact negotiatedduring the transition from military to civilian rule in 1990. The civiliangovernment held intensive discussions with a wide range of playersregarding the ‘social debt’ owed to the many people impoverished bythe economic transformations imposed under the dictatorship. Theresult was an agreement to increase personal and corporate incometax and VAT, with the extra revenue earmarked for greater socialspending. 143DECENTRALISATIONIn recent decades, many of the more innovative changes to state structureshave occurred through a process with a deeply unenticing name:decentralisation. Under way in some 80 per cent of countries by theend of the 1990s, 144 decentralisation pushes power and decisionsdown from national to local levels and has become the vogue for bothgood and bad reasons. On the positive side, proponents argue that itbrings power closer to the people, ensuring that local decisions matchlocal needs. Less positively, some governments see decentralisation asa politically acceptable way to evade the demands of national CSOs,especially trade unions, and to reduce the size of the state.In Southern Peru, Quique Quilla, the mayor of the rural town ofSandia, reckons that the municipality can build schools for half the99