Taxation and Democratization

Thushyanthan Baskaran

World Development, 2014, vol. 56, issue C, 287-301

Abstract: Anecdotal evidence from pre-modern Europe and North America suggests that rulers are forced to become more democratic once they impose a significant fiscal burden on their citizens. One difficulty in testing this “taxation causes democratization” hypothesis empirically is the endogeneity of public revenues. I use introductions of value added taxes and autonomous revenue authorities as sources of quasi-exogenous variation to identify the causal effect of the fiscal burden borne by citizens on democracy. The instrumental variables regressions with a panel of 122 countries over the period 1981–2008 suggest that revenues have on average a mild positive effect on democracy.

Keywords: taxation; democracy; democratic transition; tax innovations (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Working Paper: Taxation and democratization (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:56:y:2014:i:c:p:287-301

DOI: 10.1016/j.worlddev.2013.11.011

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