The effect of church tax on church membership

Teemu Lyytikäinen and Torsten Santavirta ()

No 20, Working Papers from VATT Institute for Economic Research

Abstract: Abstract In this study we examine the effect of church tax on the church membership decision using Finnish data. We present both descriptive statistics from an opting-out website and econometric evidence exploiting the panel structure of a large individual-level data set. Our descriptive analysis shows that opting-out is concentrated towards the last days of the year, i.e., the last chance to avoid paying church tax for the entire coming year. Our econometric evidence suggests however, that the average effect of tax incentives in the whole population is very small in magnitude, while being statistically significant. The price elasticity of church membership is roughly -0.01. In addition, we find that church membership dropped substantially when a law change made opting-out significantly easier. This finding suggests that transaction costs play an important role in the membership decision.

Keywords: Church tax, church membership, transaction cost, Taxation, Verotus, Taxation and Social Transfers, Julkisen talouden rahoitus ja tulonsiirrot, H240 - Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes, H310 - Fiscal Policies and Behavior of Economic Agents: Household (effects on labor supply), Z120 - Cultural Economics: Religion, (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (1)

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Journal Article: The effect of church tax on church membership (2013)
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