Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161596
Authors: 
von Schiller, Armin
Year of Publication: 
2017
Series/Report no.: 
WIDER Working Paper 2017/32
Abstract: 
This paper explores the effect of party system institutionalization on the reliance of tax systems on the personal income tax. As a first step, the paper re-examines the relationship between party system institutionalization and taxation patterns employing the recently launched Government Revenue Dataset. In a second step, the relationship in tested in different country subgroups, based on governance structures, availability of alternative sources of revenue, and geographical location. The main results remain fairly robust using the Government Revenue Dataset: where bureaucratic capacity is low, the effect of party system institutionalization is large and highly significant, whereas where bureaucratic capacity is high this effect disappears. Furthermore, the analysis using the Government Revenue Dataset provides additional insights into the large variance between groups of countries. The results indicate that the effect is particularly strong and robust in democratic regimes and where alternative sources of revenue are abundant. Overall, the findings can be considered to provide additional support for two claims: first, that taxation is best understood as a problem of credible commitment, particularly where bureaucratic capacity tends to be limited, and second, that institutionalized collective actors, such as political parties, play a key role in solving this problem.
Subjects: 
personal income tax
party system institutionalization
bureaucratic capacity
fiscal contractualism
fiscal capacity
JEL: 
D31
H24
H26
H30
D72
D78
ISBN: 
978-92-9256-256-4
Document Type: 
Working Paper

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