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Ghost-House Busters: The Electoral Response to a Large Anti Tax Evasion Program

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  • Casaburi, Lorenzo
  • Troiano, Ugo

Abstract

The incentives of political agents to enforce tax collection are key determinants of the levels of compliance. We study the electoral response to the Ghost Buildings program, a nationwide anti-tax evasion policy in Italy that used innovative monitoring technologies to target buildings hidden from tax authorities. Two million buildings were registered as a result of the program. Our difference-in-differences identification strategy exploits both variation across towns in the ex-ante program scope to increase enforcement as well as administrative data on actual building registrations. Local incumbents experience an increase in their reelection likelihood as a consequence of the policy. In addition, these political returns are higher in areas with lower tax evasion tolerance and with higher speed of public good provision, implying complementarity among enforcement policies, the underlying tax culture, and government efficiency.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 52242.

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Date of creation: 12 Dec 2013
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Handle: RePEc:pra:mprapa:52242

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Keywords: tax evasion; public economics; political economics;

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References

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Cited by:
  1. Veronica Grembi & Tommaso Nannicini & Ugo Troiano, 2011. "Policy Responses to Fiscal Restraints: A Difference-in-Discontinuities Design," Working Papers 397, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Francesco Drago & Tommaso Nannicini & Francesco Sobbrio, 2014. "Meet the Press: How Voters and Politicians Respond to Newspaper Entry and Exit," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 159-88, July.

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