On the response of household expenditure on cinema and performing arts to changes in indirect taxation: a natural experiment in Spain


This paper draws inference on the effect of changes in indirect taxation on household spending on cinema and performing arts using data from the Spanish household expenditure survey. As of September 2012, value-added tax (VAT) on cinema and performing arts in Spain was raised 13 percent points, with the exception of the Canary Islands which are not part of the Spanish VAT territory. Indirect taxation levied on cinema and performing arts through the General Indirect Tax of Canary Islands (Impuesto General Indirecto de Canarias, IGIC) had changed in July 2012 by only 2 percent points. Such an uneven raise in the tax rates is the source of exogenous variation used for identification in this paper. As the sample of treated households (exposed to the VAT rise) is much larger than the sample of untreated households (exposed to the IGIC rise), we use causal inference methods to estimate the average treatment effect of the VAT rise on the untreated households. We find that the average household expenditure on cinema and performing arts of the untreated households would not have changed significantly, had untreated households been exposed to the VAT rise. However, this average treatment effect would not have been homogeneous, as we identify an average treatment effect conditional on participation of 52.37 euros. Thus, the tax rise would have increased the annual expenditure of those households that spend on cinema and performing arts regularly.

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  1. 1.

    Item 09421 includes expenditure on attending bullfighting, as in Spain many consider it an art. A law was approved in 2013 for the regulation of bullfighting as cultural heritage (Agencia Estatal Boletín Oficial del Estado 2013). Accordingly, this is now included in the plan of action of the Ministry of Education and Culture and Sports (Ministry of Education and Culture and Sports 2013). Since 2017, the new Classification of Individual Consumption by Purpose ECOICOP replaces the former COICOP classification in Spanish official statistics. The COICOP category 09421 now corresponds to the new ECOICOP category 094210, which contains exactly the same group of services.

  2. 2.

    For various examples of media coverage, visit the following links: El Pais (07/13/2012), El Pais (08/01/2012) and ABC (07/13/2012).

  3. 3.

    El Confidencial (05/06/2013).

  4. 4.

    Unfortunately, the CPI is not available for cinema and performing arts specifically, but for aggregate cultural services, COICOP category 0942, which includes cinema and performing arts (09421), and also museums, libraries, art galleries and exhibitions (09422), historic monuments, national parks, zoological and botanical gardens and aquaria (09423), audio and video equipment rentals and pay per view TV (09424), and photography and private services for parties and pets (09425).

  5. 5.

    The Organic Law 2/2012, of 27 April, on budgetary stability and financial sustainability introduced changes in the Spanish Constitution and obliged central administration, regional governments, local corporations, and social security administration (Agencia Estatal Boletín Oficial del Estado 2012).

  6. 6.

    COICOP item 09421 bundles together cinema, performing arts and other shows and does not mention how they are shared out in household expenditure. However, box-office data collected in the Cultural Statistics Yearbook of the Spanish Ministry of Culture indicate that, in 2012, box-office revenue from cinema was 95.57%, while the revenue coming from performing arts (live performances of theater, opera and zarzuela, concerts and dance) was 4.43%. As box-office revenue is the other side of the coin of household expenditure, this proportion should be similar in COICOP item 09421.

  7. 7.

    As the Canary Islands are a major touristic destination, changes in tourist arrivals could be a concern for our analysis. However, the survey includes households whose household head is a resident, not a tourist. Additionally, most households are interviewed twice in consecutive years. Thus, restricting the analysis to households that participate twice, the sample excludes households which migrate in or out of the country between waves. Therefore, migration changes between waves do not affect our analysis. Notice that had we used data on box-office sales, both tourism and migration would influence the results.

  8. 8.

    Notice that since 2017, there is a CPI for ECOICOP item 094210 (cinema, theater and concerts), whereas before that date and as shown in Fig. 1 they used to be bundled together with other cultural services into a CPI for cultural services for COICOP category 09421.


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We thank participants at the 20th International Conference on Cultural Economics held at RMIT University in Melbourne, 26-29 June 2018 for their comments. Financial support from the Basque Government (IT873-13 and IT1336-19), and from the Spanish Ministry of Economy and Competitiveness/FEDER (ECO2015-64467-R) is gratefully acknowledged.

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Correspondence to Javier Gardeazabal.

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Ateca-Amestoy, V., Gardeazabal, J. & Ugidos, A. On the response of household expenditure on cinema and performing arts to changes in indirect taxation: a natural experiment in Spain. J Cult Econ 44, 213–253 (2020). https://doi.org/10.1007/s10824-019-09357-0

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  • Policy evaluation
  • Natural experiment
  • Indirect taxation
  • VAT
  • IGIC
  • Cinema
  • Performing arts
  • Household expenditure
  • Spanish household budget survey

JEL Classification

  • D12
  • H31
  • Z11