Ghost-House Busters: The Electoral Response to a Large Anti Tax Evasion Program
59 Pages Posted: 28 Oct 2011 Last revised: 21 Jul 2015
Date Written: July 20, 2015
The incentives of political agents to enforce tax collection are key determinants of the levels of compliance. We study the electoral response to the Ghost Buildings program, a nationwide anti tax evasion policy in Italy that used innovative monitoring technologies to target buildings hidden from tax authorities. The program induced monetary and non-monetary benefits for non-evaders and an increase in local government expenditures. A one standard deviation increase in town-level program intensity leads to a 4.8 percent increase in local incumbent reelection rates. In addition, these political returns are higher in areas with lower tax evasion tolerance and with higher efficiency of public good provision, implying complementarity among enforcement policies, the underlying tax culture, and the quality of the government.
Keywords: tax evasion, public economics, political economics
JEL Classification: H26, H71, D72, E62, O17, O38
Suggested Citation: Suggested Citation