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Is the tax administration just a money machine? Empirical evidence on redistributive politics

Economics of Governance volume 12, pages 275–299 (2011)Cite this article

Abstract

Personal income tax represents the main source of tax revenue in any developed country. In this paper, we analyse how efficiently this tax is administered in the Spanish case. While we find that the managerial (or net) efficiency of the tax administration was very high for the period 1993–2002 (95.9%), our main aim here is to identify the determinants of this. Interestingly, political factors are found to play a role. Specifically, the fear of losing a parliamentary seat in a region forces the tax authorities to reduce their efficiency in ensuring tax compliance in that region (“swing voter model”). Additionally, in those electoral districts where the central government obtains higher electoral support the efforts to collect taxes diminish (“core voter model”). However, the former political effect tends to disappear when the central government holds a sufficient majority in the central parliament. Thus, we find empirical evidence on redistributive politics in tax administration.

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Authors and Affiliations

  1. Institut Economia de Barcelona (IEB), Universitat de Barcelona (UB), Barcelona, Spain

    Alejandro Esteller-Moré

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  1. Alejandro Esteller-Moré
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Correspondence to Alejandro Esteller-Moré.

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Esteller-Moré, A. Is the tax administration just a money machine? Empirical evidence on redistributive politics. Econ Gov 12, 275–299 (2011). https://doi.org/10.1007/s10101-011-0095-1

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Keywords

  • Tax administration
  • Personal income tax
  • Redistributive politics

JEL Classification

  • H11
  • H24
  • H77
  • H83