Vote expectations and pre-electoral tariff cuts in Flemish municipalities
Using data covering 5 election moments (1976-2000) for 308 Flemish municipalities we look for evidence whether local governments reduce the tariffs of the two main local taxes before elections. Election moments are central to both the political budget cycle literature and the strategic debt models. Next to partisan motives, the political budget cycle theory refers to incumbents’ opportunistic motives: governments manipulate fiscal policy facing elections to attract voters. According to strategic debt models expenditure drift and less harsh fiscal policies might also be a means to increase the... Mehr ...
Verfasser: | |
---|---|
Dokumenttyp: | conference |
Erscheinungsdatum: | 2007 |
Schlagwörter: | Business and Economics |
Sprache: | Englisch |
Permalink: | https://search.fid-benelux.de/Record/base-27094351 |
Datenquelle: | BASE; Originalkatalog |
Powered By: | BASE |
Link(s) : | https://biblio.ugent.be/publication/888929 |
Using data covering 5 election moments (1976-2000) for 308 Flemish municipalities we look for evidence whether local governments reduce the tariffs of the two main local taxes before elections. Election moments are central to both the political budget cycle literature and the strategic debt models. Next to partisan motives, the political budget cycle theory refers to incumbents’ opportunistic motives: governments manipulate fiscal policy facing elections to attract voters. According to strategic debt models expenditure drift and less harsh fiscal policies might also be a means to increase the debt burden left to the next government, which in turn will affect the fiscal stance during the next legislation. As such, at least in theory, both winning and loosing governments seem to benefit from pre-electoral tariff reductions and as such we expect to find a great many municipalities to engage into tariff cuts. The dataset however shows this is clearly not the case. We argue that the differences in the fiscal policy reaction of governments facing elections might have to do with their expectations of staying into office. In our analysis we make the decision to cut tariffs depending on the expected vote percentage of the government party (parties).As we do not possess reliable data on the perceived re-election probability measured at the moment elections are upcoming, we rely on proxy variables to measure these vote expectations. Instead of working with post election outcomes, as Pettersson-Lidbom (2001) does, we make use of the percentage of votes which is predicted by an appropriate vote function. This paper contributes to the literature in several ways. By focusing on vote expectations, this analysis is integrating insights of both the PBC-models, the SUD-models and the large literature on vote and popularity functions. Contrary to former research the most visible tariff changes are central to the discussion, rather than changes in tax revenues or tax revenues over GDP. Finally, we hope to extend the knowledge on ...