Book contents
- Frontmatter
- Preface
- Contents
- List of Authors
- Introduction
- PART I TAXATION, STATE AND SOCIETY: RECIPROCITY AND THE LIMITS OF THE POWER TO TAX
- PART II Trust and morality: tax governance in need of transparency
- Taxation and Ethics: an Impossible Marriage?
- An Overview of Political Economy Issues in Taxation and Tax Reforms
- Trust in the Tax System: The Problem of Lobbying
- Restoring Stakeholders’ Trust in Multinationals’ Tax Planning Practices with Corporate Social Responsibility (CSR)
- PART III International taxation: in search of democratic legitimacy
- PART IV Behavioural aspects of taxation and trust
An Overview of Political Economy Issues in Taxation and Tax Reforms
from PART II - Trust and morality: tax governance in need of transparency
Published online by Cambridge University Press: 21 September 2018
- Frontmatter
- Preface
- Contents
- List of Authors
- Introduction
- PART I TAXATION, STATE AND SOCIETY: RECIPROCITY AND THE LIMITS OF THE POWER TO TAX
- PART II Trust and morality: tax governance in need of transparency
- Taxation and Ethics: an Impossible Marriage?
- An Overview of Political Economy Issues in Taxation and Tax Reforms
- Trust in the Tax System: The Problem of Lobbying
- Restoring Stakeholders’ Trust in Multinationals’ Tax Planning Practices with Corporate Social Responsibility (CSR)
- PART III International taxation: in search of democratic legitimacy
- PART IV Behavioural aspects of taxation and trust
Summary
ABSTRACT
Political elements interact with economic factors to determine the decision of tax instruments and the choice among them. Political constraints and incentives are indeed the true driver of tax reforms. How are fiscal systems and instruments chosen in a political and institutional context? The literature on this argument is very extensive. This chapter provides a general framework for the analysis of political economy of taxation and tax reforms, referring to the probabilistic voting model. Our framework links collective choice theoretical models to empirical analysis, which tests the level and composition of public revenues in democratic countries. It delivers interesting guidelines to consider the following issues: (i) labour income tax systems and reforms in EU countries; (ii) wealth transfer taxes in G7 countries; (iii) the emergence of tax complexity in modern democracies. Finally, it turns out to be valuable when we consider the link between taxation (and its major components) and democracy around the world.
INTRODUCTION
Taxation is a major issue in economics and politics. Tax design and the implementation of tax reforms are at the core of economic policy. They are also among the more debated issues in the political arena. In modern democracies tax reforms need the support of voters in order to be implemented, while at the same time policy-makers try to design a tax system and propose tax reforms to attract and please as many voters as possible. Political support is essential in order to implement tax reforms. The issue of taxation can attract and shift votes, in particular those of uncertain citizens (who may be a large part of the electorate) who decide which party to vote for by computing the advantages, even (and, in some cases, mainly) fiscal ones, that they could enjoy from this party as opposed to the opponents. In non-democratic countries the process underlying tax decisions is much more difficult and less clear to predict. Lobbies, interest groups and economically and politically powerful groups have a dominant role. When countries experience a democratic transition it may be very likely that these influences remain strong and interact with voters ‘ preferences in determining tax policy outcomes. The outcome is therefore more complex to predict.
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- Chapter
- Information
- Building Trust in Taxation , pp. 137 - 150Publisher: IntersentiaPrint publication year: 2017
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