The effect of church tax on church membership
AbstractAbstract In this study we examine the effect of church tax on the church membership decision using Finnish data. We present both descriptive statistics from an opting-out website and econometric evidence exploiting the panel structure of a large individual-level data set. Our descriptive analysis shows that opting-out is concentrated towards the last days of the year, i.e., the last chance to avoid paying church tax for the entire coming year. Our econometric evidence suggests however, that the average effect of tax incentives in the whole population is very small in magnitude, while being statistically significant. The price elasticity of church membership is roughly -0.01. In addition, we find that church membership dropped substantially when a law change made opting-out significantly easier. This finding suggests that transaction costs play an important role in the membership decision.
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Bibliographic InfoPaper provided by Government Institute for Economic Research Finland (VATT) in its series Working Papers with number 20.
Date of creation: 30 Dec 2010
Date of revision:
Other versions of this item:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- Z12 - Other Special Topics - - Cultural Economics - - - Religion
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
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- Essi Eerola & Teemu Lyytikäinen, 2012. "On the role of public price information in housing markets," Working Papers 30, Government Institute for Economic Research Finland (VATT).
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