| The yawning gap between rich and poor is one of the major concerns of our age. There exists a broad consensus in the literature that global economic inequality is ultimately rooted in institutional differences. Diverging paths of institutional development are particularly notable across former European colonies, of which some now rank among the richest, while others rank among the poorest countries of the world. But to what extent did colonial institutions vary across colonies? And in what ways did colonial institutions pre-condition long run economic development, if they did at all? A comparative analysis of fiscal regimes offers an excellent opportunity to obtain new answers to these longstanding questions. Taxation was a key element of colonial interference in local economic and political affairs. Some scholars claim that taxes were paramount in colonial policies of economic extraction. They argue that excessive taxes have depleted natural and human resources and provoked endemic political conflicts. Others reject this view arguing that colonial taxes were not excessive and that there is little evidence for such adverse consequences. This project contributes to this debate, but even more, it develops a new perspective. I argue that, irrespective of the discussion about extraction, the implementation of solid fiscal regimes is a necessary condition for a sustainable provision of public goods such as infrastructure, health care and education. These public goods are essential to develop higher levels of economic and social welfare. The failure to develop a solid tax base during the process of colonial state formation may explain a substantial part of contemporary institutional differences. To test this hypothesis, I will not only compare tax levels across a global sample of former European colonies, I will also explore the continuity and changes in the organisation of fiscal regimes across five centuries in a case-study framework. |
