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Political Competition, Tax Salience and Accountability: Theory and Some Evidence from Italy

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  • Bracco, Emanuele

    (University of Lancaster)

  • Porcelli, Francesco

    (University of Warwick)

  • Redoano, Michela

    (University of Warwick)

Abstract

This paper argues that high political competition does not necessarily induce policy makers to perform better as previous research has shown. We develop a political economy model and we show that when political competition is tight, and elected politicians can rely on more tax instruments, they will substitute salient taxes with less salient ones, which are not necessarily preferable. These predictions are largely confirmed using a dataset on Italian municipal elections and taxes.

Suggested Citation

  • Bracco, Emanuele & Porcelli, Francesco & Redoano, Michela, 2013. "Political Competition, Tax Salience and Accountability: Theory and Some Evidence from Italy," CAGE Online Working Paper Series 126, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:126
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    Cited by:

    1. Massimiliano Ferraresi & Umberto Galmarini & Leonzio Rizzo & Alberto Zanardi, 2019. "Switch toward tax centralization in Italy: a wake-up for the local political budget cycle," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(4), pages 872-898, August.
    2. Bordignon, Massimo & Grembi, Veronica & Piazza, Santino, 2017. "Who do you blame in local finance? An analysis of municipal financing in Italy," European Journal of Political Economy, Elsevier, vol. 49(C), pages 146-163.
    3. Alberto Batinti & Andrea Filippetti & Luca Andriani, 2017. "Why Does Social Capital Increase Government Performance? The Role of Local Elections across Italian Municipalities," Management Working Papers 13, Birkbeck Department of Management, revised Apr 2017.
    4. Křápek Milan & Formanová Lucie, 2017. "Proposal for an Alternative Indicator for Testing the Presence of the Political-Budget Cycle in the Case of Tax Policy," NISPAcee Journal of Public Administration and Policy, Sciendo, vol. 10(2), pages 229-249, December.
    5. Atsuyoshi Morozumi & Francisco Jose Veiga & Linda Goncalves Veiga, 2014. "Electoral effects on the composition of public spending and revenue: evidence from a large panel of countries," Discussion Papers 2014/16, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    6. Alberto Batinti & Luca Andriani & Andrea Filippetti, 2019. "Local Government Fiscal Policy, Social Capital and Electoral Payoff: Evidence across Italian Municipalities," Kyklos, Wiley Blackwell, vol. 72(4), pages 503-526, November.
    7. Brian Chi-ang Lin & Siqi Zheng & Marie Briguglio, 2016. "Household Cooperation In Waste Management: Initial Conditions And Intervention," Journal of Economic Surveys, Wiley Blackwell, vol. 30(3), pages 497-525, July.
    8. Altemeyer-Bartscher, Martin, 2014. "Fiscal Equalization, Tax Salience, and Tax Competition," IWH Discussion Papers 3/2014, Halle Institute for Economic Research (IWH).
    9. Bracco, Emanuele, 2018. "A fine collection: The political budget cycle of traffic enforcement," Economics Letters, Elsevier, vol. 164(C), pages 117-120.
    10. Aprile, Maria Carmela & Chiarini, Bruno & Marzano, Elisabetta, 2019. "Land use and decentralized government: A strategic approach for playing a short-sighted equilibrium," Land Use Policy, Elsevier, vol. 89(C).
    11. Tommaso Giommoni, 2019. "Does progressivity always lead to progress? The impact of local redistribution on tax manipulation," CESifo Working Paper Series 7588, CESifo.
    12. Altemeyer-Bartscher, Martin & Zeddies, Götz, 2017. "Bracket creeps: Bane or boon for the stability of numerical budget rules?," IWH Discussion Papers 29/2016, Halle Institute for Economic Research (IWH), revised 2017.
    13. Sutirtha Bagchi, 2013. "The Effects of Political Competition on the Funding and Generosity of Public-Sector Pension Plans," 2013 Papers pba941, Job Market Papers.

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    More about this item

    Keywords

    Political Competition; Government; Accountability; Tax Salience.;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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