Incumbency and tax compliance: evidence from Pakistan

The previous work on political accountability and transparency mainly exists about the voter’s reaction when any negative information is provided about their incumbents. A little bit of work on politicians’ actions to publicly disclose information is available. To the best of my knowledge, there was no study available that simultaneously explores the politician’s actions when they know that their actions are easily accessible by the general public and then the response of voters to their actions. This study tries to fill this gap by examining the behavior of Pakistani politicians towards tax compliance even when they knew that their income tax payments can easily be accessible by individuals and then the response of voters to politicians’ actions in the next general election. Using assets ownership and tax payment data from 2013 to 2017 in the case of Pakistan under the regression as control strategy that was pioneered by George Udny Yule first, we give strong evidence that the members of the ruling parties feel less pressure and are less interested in tax compliance than the member of non-ruling parties and second, voters electorally punish tax cheaters. These results also hold by controlling the other correlating factors, which support our hypothesis that the opposition parties are highly interested to change their status from powerless to becoming powerful and act accordingly.