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Tax Structure Turbulence in OECD Countries

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  • Ashworth, John
  • Heyndels, Bruno
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    Abstract

    This paper analyses whether and to what extent politicians manipulate tax structures strategically in order to win elections or for ideological purposes. We introduce an indicator for tax structure turbulence which measures the degree to which a country's tax structure changes from one year to another. Using data on 18 OECD countries over the period 1965-95, we find clear evidence of a political budget cycle in national tax structures. More precisely, we find that in election years, tax structures are changed significantly less than in other years. Further, the dispersion of political power significantly lowers the ability of governments to change the tax structure. We do not, however, find any evidence of partisan budget cycles in national tax systems following political regime changes. Copyright 2002 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Public Choice.

    Volume (Year): 111 (2002)
    Issue (Month): 3-4 (June)
    Pages: 347-76

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    Handle: RePEc:kap:pubcho:v:111:y:2002:i:3-4:p:347-76

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    Cited by:
    1. Helene Ehrhart, 2013. "Elections and the structure of taxation in developing countries," Public Choice, Springer, vol. 156(1), pages 195-211, July.
    2. Benny Geys & Jan Vermeir, 2008. "Taxation and presidential approval: separate effects from tax burden and tax structure turbulence?," Public Choice, Springer, vol. 135(3), pages 301-317, June.
    3. Hansson, Åsa & Porter, Susan & Perry Williams, Susan, 2012. "The Effect of Political and Economic Factors on Corporate Tax Rates," Working Paper Series 942, Research Institute of Industrial Economics.
    4. Geys, Benny & Vermeir, Jan, 2008. "The political cost of taxation: new evidence from German popularity ratings," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-06, Social Science Research Center Berlin (WZB).
    5. Margarita Katsimi & Vassilis Sarantides, 2012. "Do elections affect the composition of fiscal policy in developed, established democracies?," Public Choice, Springer, vol. 151(1), pages 325-362, April.
    6. Asatryan, Zareh & Baskaran, Thushyanthan & Heinemann, Friedrich, 2014. "The effect of direct democracy on the level and structure of local taxes," ZEW Discussion Papers 14-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. Lucinda, Cláudio Ribeiro de & Arvate, Paulo Roberto, 2007. "Ideological changes and tax structure : Latin American countries during the nineties," Textos para discussão 168, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    8. Ashworth, John & Geys, Benny & Heyndels, Bruno, 2006. "Determinants of tax innovation: The case of environmental taxes in Flemish municipalities," European Journal of Political Economy, Elsevier, vol. 22(1), pages 223-247, March.
    9. Konstantinos Angelopoulos & George Economides & Pantelis Kammas, 2009. "Do political incentives matter for tax policies? Ideology, opportunism and the tax structure," Working Papers 2009_12, Business School - Economics, University of Glasgow.
    10. Angelopoulos, Konstantinos & Economides, George & Kammas, Pantelis, 2012. "Does cabinet ideology matter for the structure of tax policies?," European Journal of Political Economy, Elsevier, vol. 28(4), pages 620-635.
    11. Niklas Potrafke, 2006. "Political Effects on the Allocation of Public Expenditures: Empirical Evidence from OECD Countries," Discussion Papers of DIW Berlin 653, DIW Berlin, German Institute for Economic Research.

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