EconPapers    
Economics at your fingertips  
 

Democratisation and tax structure in the presence of home production: Evidence from the Kingdom of Greece

Pantelis Kammas () and Vassilis Sarantides ()

Journal of Economic Behavior & Organization, 2020, vol. 177, issue C, 219-236

Abstract: This paper examines the impact of democratisation on tax structure in an agrarian economy where goods can be produced at home for self-consumption. We first develop a model of optimal taxation with heterogeneous agents where the good produced in the market is subject to a consumption tax, whereas the homogeneous good produced at home is burdened by a direct tax (such as land tithes). Contrary to conventional theory, our model suggests that extension of the voting franchise to poorer segments of the population exerts a negative impact on the share of direct to indirect taxes. Using unique national and regional tax data for the Kingdom of Greece - a typical agrarian economy where universal male suffrage was established in 1864 - we provide consistent empirical evidence. Greek governments adjusted tax policy in order to meet the preferences of the newly enfranchised electorate that constituted mostly peasants and farmers. This group was harmed substantially by direct taxes on land but was able to avoid indirect taxes through self-consumption. We also analyse a sample of 12 European countries over the same period and provide evidence for a similar change in the tax structure when the agricultural sector dominates the economy.

Keywords: Democracy; Tax structure; Fical capacity (search for similar items in EconPapers)
JEL-codes: H2 P16 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268120301785
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Democratisation and tax structure in the presence of home production: Evidence from the Kingdom of Greece (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:177:y:2020:i:c:p:219-236

DOI: 10.1016/j.jebo.2020.05.025

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-10-12
Handle: RePEc:eee:jeborg:v:177:y:2020:i:c:p:219-236