Elections and the structure of taxation in developing countries

Helene Ehrhart

Working papers from Banque de France

Abstract: This article analyses the impact of the electoral calendar on the composition of tax revenue (direct versus indirect taxes). It thus represents an extension of traditional political budget-cycle analyses assessing the impact of elections on overall revenue. Panel data from 56 developing countries over the 1980-2006 period reveals a clear pattern of electorally-related policy interventions. Taking the potential endogeneity of election timing into account, we find robust evidence of lower indirect taxes being applied by incumbent governments in the period just prior to an election. Indirect tax revenue in election years is estimated to be 0.3 GDP percentage points lower than in other years, corresponding to a fall of about 3.4% of the average figure in the sample countries, while there is no such relationship with direct tax revenue.

Keywords: Political budget cycles; Elections; Taxation; Developing countries. (search for similar items in EconPapers)
JEL-codes: D72 E62 O10 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-cdm, nep-pbe, nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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Related works:
Journal Article: Elections and the structure of taxation in developing countries (2013)
Working Paper: Elections and the structure of taxation in developing countries (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:419

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