Political competition, tax salience and accountability. Theory and evidence from Italy

Bracco, Emanuele; Porcelli, Francesco; Redoano, Michela

doi:10.1016/j.ejpoleco.2018.11.001

Cited by 37 publications

(24 citation statements)

References 43 publications

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“…So, policy makers who manipulate the composition of revenues substituting the more with the less salient taxes, cause detrimental effects on the transparency and accountability of fiscal policy (Cabral and Hoxby, 2012). Our claim is also supported by empirical studies on Italy confirming that the tax burden has been shifted from property to income taxes to hide the tax burden to citizens (Bordignon and Piazza, 2010) or when electoral competition is particularly sharp (Bracco et al, 2013).…”

Section: Measuring Government Performance Through Budgetary Compositionsupporting

confidence: 59%

Why Does Social Capital Increase Government Performance? The Role of Local Elections across Italian Municipalities

2017

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There is wide consensus that social capital increases government performance. However, the very mechanism underlying the relationship between social capital and wellperforming governments remains unclear. In this paper we focus on the budgetary composition of local governments and find that the joint effect of larger social capital and higher quality in government's spending improves the re-election chances of incumbent policy makers. By looking at 8,000 Italian municipalities over the period 2003-2012, we show that incumbent mayors who carry out a forward-looking and transparent fiscal agenda are more likely to be reelected where the level of local social capital is larger. In contexts with larger social capital, we obtain a non-trivial average effect of a 54% larger probability to be reelected when a more forward-looking agenda is in place. Thus, the good conduct of incumbent mayors is rewarded, but only in contexts with more social capital. Twin estimates considering a more transparent fiscal agenda are not significant but show the predicted sign and the comparable size of a 31% larger probability. Our evidence is robust when controlling for the political budget cycle, and provides ground for further exploration of the electoral mechanism as an important channel to explain the connection between social capital and good government performance.

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Section: Measuring Government Performance Through Budgetary Compositionsupporting

confidence: 59%

Why Does Social Capital Increase Government Performance? The Role of Local Elections across Italian Municipalities

2017

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“…9 A similar argument can be found in Bracco et al (2019), who state that politicians strategically rely more on less salient revenue sources as compared to less visible ones during electoral competitions.…”

Section: Estimation Strategy and Resultsmentioning

confidence: 59%

Political Budget Cycle, Tax Collection, and Yardstick Competition

Ferraresi

2021

The B.E. Journal of Economic Analysis &Amp; Policy

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This paper exploits the political cycle of Italian municipalities to test for the presence of strategic interactions in the collection of local taxation. The revenue from the personal income tax surcharge—a tax tool of low salience—is (positively) plagued by political manipulation and is found to be a strategic complement, but only when mayors run for re-election, a finding consistent with the yardstick competition hypothesis. More salient fiscal tools, such as property tax and user fees and charges, are also (negatively) affected by budget cycles, but they do not appear to be spatially correlated.

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“…Cabral and Hoxby () show that the transparency and accountability of the fiscal budget can be undermined by opportunistic local policymakers who manipulate the composition of revenues substituting the more salient property tax with the less salient income one. This is supported by empirical studies about Italy suggesting that mayors shift from property to income taxes to hide the tax burden to citizens (Bordignon et al, ), and mainly when the electoral competition is sharp (Bracco et al, ) . From here our second hypothesis:H2 Greater shares of property tax vs. income surcharge lead to a higher probability of incumbent mayor reelection as social capital increases.…”

Section: Social Capital Municipal Fiscal Policy and Electoral Payoffmentioning

confidence: 78%

Local Government Fiscal Policy, Social Capital and Electoral Payoff: Evidence across Italian Municipalities

Batinti¹,

Andriani²,

Filippetti³

2019

Kyklos

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Summary Citizens' attitudes and reactions to policymakers' decisions depend on several factors, including informal institutions. The novelty of this paper is to use social capital as a moderator factor to shed light on the relationship between fiscal policies and electoral outcomes. We investigate this relationship using a sample of 6,000 Italian municipalities over the period 2003‐2012 and use a Conditional Logit Matching model comparing incumbents to challengers' characteristics within each election. We find that social capital increases the odds of the re‐election of incumbent mayors who adopted a local fiscal policy more oriented towards capital investment (versus current expenditure) and towards property tax (versus income surcharge). This suggests that social capital encourages governmental functions and public policies improving long‐term economic commitments, institutional transparency, and accountability. It also shows that decentralization works relatively better with social capital.

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Political competition, tax salience and accountability. Theory and evidence from Italy

Abstract: Please refer to published version for the most recent bibliographic citation information. If a published version is known of, the repository item page linked to above, will contain details on accessing it.

Cited by 37 publications

References 43 publications

Why Does Social Capital Increase Government Performance? The Role of Local Elections across Italian Municipalities

Why Does Social Capital Increase Government Performance? The Role of Local Elections across Italian Municipalities

Political Budget Cycle, Tax Collection, and Yardstick Competition

Local Government Fiscal Policy, Social Capital and Electoral Payoff: Evidence across Italian Municipalities

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