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Tax awareness and reform of the welfare state: Hungarian survey results

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  • László Csontos
  • János Kornai
  • István György Tóth

Abstract

This paper reports the results of a survey on the tax awareness of the Hungarian population. Knowledge of tax types and levels is investigated, followed by questions on preferences for state expenditures. The design of the survey is aimed at a contingent evaluation of public sector involvement in health, pensions and higher education. The results show that fiscal illusions have their roots in poor knowledge of the tax cost of public expenditures. When people are provided with additional information on these factors, preferences for state involvement seem to diminish. Possible reform scenarios can be modelled with alternative formulations of institutional arrangements. Respondents tend to have most support for mixed strategies, while 'pure state' and 'pure market' solutions receive the lowest levels of support. However, since the outcome of any public sector reforms depends heavily on evaluation of the current regimes, an extensive part of the paper is devoted to the investigation of the 'status quo effect'. The paper, though descriptive in general, provides normative evaluations and suggestions for further reforms. Copyright The European Bank for Reconstruction and Development, 1998.

Suggested Citation

  • László Csontos & János Kornai & István György Tóth, 1998. "Tax awareness and reform of the welfare state: Hungarian survey results," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(2), pages 287-312, November.
  • Handle: RePEc:bla:etrans:v:6:y:1998:i:2:p:287-312
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0351.1998.tb00050.x
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    References listed on IDEAS

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    1. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135-135.
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    Cited by:

    1. Dóra Benedek & Orsolya Lelkes, 2011. "The Distributional Implications of Income Under‐Reporting in Hungary," Fiscal Studies, Institute for Fiscal Studies, vol. 32(4), pages 539-560, December.
    2. Carol Scott Leonard, 2000. "Rational Resistance to Land Privatisation in Russia: Modelling the Behaviour of Rural Producers in Response to Agrarian Reforms, 1861-2000," Economics Series Working Papers 13, University of Oxford, Department of Economics.
    3. Srđan Redžepagić & Matthieu Llorca, 2007. "Does Politics Matter in the Conduct of Fiscal Policy? Political Determinants of the Fiscal Sustainability: Evidence from Seven Individual Central and Eastern European Countries (CEEC)," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 54(4), pages 489-500, December.
    4. Mohamad Ali Roshidi Ahmad & Zuriadah Ismail & Hazianti Abdul Halim, 2016. "Awareness and Perception of Taxpayers towards Goods and Services Tax (GST) Implementation," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(11), pages 75-94, November.

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