Deborah Bräutigam, Odd-Helge Fjeldstad, and Mick Moore's edited volume Taxation and State-Building in Developing Countries examines the relationship among the tax system, state capacity, and state–society relations in developing countries. Each of the chapters explores the ways in which the state's strategies for satisfying its revenue needs impact patterns of governance and promote effective state institutions. Bräutigam introduces the volume by reviewing and synthesizing the broad political-economy literature on taxation. Demonstrating a truly impressive command of a vast literature that spans several disciplines, decades, and regions, she identifies two main political-economy theories of taxation around which the individual chapters are organized. The first set of theories posits a relationship between the development of the tax system and the emergence of a particular regime type whereas, the second set focuses on a connection between taxation and state capacity.

To summarize, the first theoretical literature argues that the rise of representative government in European states has its roots in the sovereign's or state's revenue imperative. In brief, the sovereign entered into a contractual relationship with taxpayers in order to collect revenues more effectively and more reliably, setting the terms of “the fiscal contract.” Ultimately, parliaments and representative governments emerged due to the sovereign's concessions to taxpaying elites. The second chapter, by Moore, analyzes a number of factors (like the presence of war, the mobility of taxable assets, the existence of natural resources, the size and complexity of the bureaucracy, and economic modernization) that contribute to or detract from the development of a consensual fiscal contract. The subsequent country studies examine a diverse subset of conditions and strategies that foster a more or less coercive approach to taxation in the developing and postcommunist world, including the reliance on centralized versus decentralized tax collection (in China, Tanzania, Uganda, and Peru), the strength of society (in Chile), the power of interest groups (in Poland), the role of critical junctures (in Poland and Russia), and the prevalence of natural resources (in Russia and Chile).

The second theoretical literature engaged by the case studies relates to state building in developing countries. According to prevailing theories, which again draw from the European experience, a state's efforts to collect tax revenue can generate modern bureaucratic capacity more broadly. While bureaucracies were outgrowths of the sovereign's need to fund wars, they expanded over time, grew more sophisticated, and took on a variety of tasks, including fostering economic development. The volume examines whether improved bureaucratic capacity can follow from the state's need to rationally and reliably collect taxes in the developing world. Some authors examine how colonial legacies shape tax collection and the efficacy of state institutions in the postcolonial context. For example, Bräutigam's fine chapter on Mauritius shows how a strong tax administration was a legacy of British colonialism. However, the British colonial legacy was less favorable in East Africa, as Fjeldstad and Ole Therkildsen point out, where local tax collection was highly coercive. In addition, several of the authors examine the impact of natural resource taxes (salt taxes in Republican China, nitrates taxes in Chile, and sugar taxes in Mauritius) on the development of state capacity.

The book closes with a fascinating chapter by Moore and Fjeldstad that examines taxation in a globalized economy. They make the point that the strong influence of epistemic communities and the international financial institutions not only has led to very similar tax practices across the developing world, as governments repeatedly adopt best practices or optimal tax policies, but has also closed off the opportunity for governments and citizens to negotiate the “fiscal contract,” thereby reducing the potential democratic dividend and state-building opportunity. Unfortunately, pressure by the International Monetary Fund and the diffusion of best practices are most pervasive in countries most in need of state building. The conclusion nicely reemphasizes the theoretical questions raised in the individual chapters and ties these questions to the constraints posed by the international environment.

The individual chapters are empirically rich, thoughtfully argued, and nicely contextualized in the broader political economy literature on taxation. This book serves as an extremely valuable introduction and overview to the main debates as they apply to the developing world. However, like most nuanced, historically rich, multicountry studies, this volume does not leave the reader with a simple takeaway message. For instance, there is no consensus on the implications of natural resource endowments or the consequences of colonialism generally (or even British colonialism specifically) for state building. Rather, the message of the volume is that the benefits of taxation for democratic governance and state building in the developing world are highly contingent upon different political, economic, and geopolitical conditions, which are elaborated in illuminating detail.

Scott Gehlbach's Representation Through Taxation instead provides a more streamlined generalizable theory of taxation based on his analysis of the postcommunist data and his deep knowledge of the Russian case. Gehlbach begins his analysis of the development of the Russian fiscal system with a story about the local vodka industry in Pskov, a sector that the regional government develops and protects since it is easier to tax than other sectors. This case beautifully illustrates the larger argument that he advances, namely, that post-Soviet states channeled collective resources to the most taxable sectors of the economy, rather than to the sectors that mobilized politically, used resources most efficiently, or held the greatest promise for overall economic development. The suboptimal fiscal arrangements persist because politicians became dependent on existing revenue streams and firms became dependent on government support.

Gehlbach provides an important extension to seminal works in political economy (R. Bates, Markets and States in Tropical Africa: The Political Basis of Agricultural Policies; 1981; M. Levi, Of Rule and Revenue, 1988; M. Olson, The Logic of Collective Action: Public Goods and the Theory of Groups, 1965) and the fiscal contract literature referenced previously by demonstrating how the particular revenue systems and the related distortions in institutional development may have less to do with the distribution of political power in society and more to do with the strategies of governments to manipulate the economy to ensure revenue streams. He contrasts the post-Soviet state's continued reliance on old revenue sources (namely, large-scale monopolistic enterprises) after the collapse of communism with the reformed approach of Eastern European states (including the Baltics), which managed to tax small businesses and individuals more effectively. Like Anuradha Joshi and Joseph Ayee's thoughtful chapter in the edited volume, Gehlbach's analysis highlights the challenges of taxing small enterprises in states with low bureaucratic capacity.

The author's analysis of the macroeconomic data and the firm-level data from the Business Environment and Enterprise Performance Survey highlights important differences in the tax systems in Eastern Europe and in the former Soviet Union (in terms of the level of taxation and the mix of revenue sources). This divergence has been widely noted in other studies, and most analyses find the higher levels of taxation in Eastern Europe (relative to the former Soviet Union) to be consistent with the universal pattern in which higher levels of development correlate with greater revenue extraction (R. Burgess and N. Stern, “Taxation and Development,” Journal of Economic Literature 31 [no. 2, 1993]: 762–830; P. Mitra and N. Stern, “Tax Systems in Transition,” World Bank Policy Research Working Paper No. 2947, 2003). Gehlbach provides further insight into the mix of revenue sources, demonstrating that the countries located farther from Western Europe and with concentrated industrial sectors were more likely to rely on old revenue sources than new sources. Certainly, both regions faced challenges with tax compliance by individuals and small firms, but the failure to collect taxes from new firms was substantially greater in the former Soviet region (minus the Baltics) than in Eastern Europe.

Gehlbach offers clear evidence that countries seeking to join the European Union oriented their tax systems more around new tax forms, especially personal income taxes. Certainly, it would be hard to overstate the importance of the European Union on tax policy in this region, given that tax harmonization was a prerequisite for European Union membership. The book's emphasis on the increased importance of the personal income tax (PIT) in Eastern Europe is counterintuitive, in that the PIT was one of the few areas not governed by accession negotiations—which makes his finding all the more interesting.

This book offers a masterful analysis of a vast amount of data covering virtually all postcommunist countries' experience with taxation into the 2000s. It is unfortunate that there were not additional country illustrations of the sort that introduced the book or that are found in the edited volume, for example, in Gerald M. Easter's excellent chapter analyzing Polish and Russian fiscal development. After all, Gehlbach's story of vodka taxation brilliantly demonstrates the reason that post-Soviet states began and then continued to rely heavily on large-scale enterprises for tax revenues. Indeed, the reader would have gained further insight into the different trajectories of the two postcommunist regions with further country-level or sector-specific discussion. But the book should be commended for putting forth a novel and persuasive theory of postcommunist fiscal development. It also represents a significant theoretical contribution to the general study of taxation and politics.