The relation between the left-right political binomial and tax burden on European Union countries

• Autor(a) principal: Quitéria, Miguel Pedro
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/24230
• topic: Tax burden; Tax structure; Political orientation; Carga fiscal; Estrutura fiscal; Orientação política

The main purpose of this study is to understand the effect of the government’s political orientation on the countries’ tax burden, testing if the left-right political binomial has a positive or negative effect on this variable. To do so, we collected information of the last three decades of the European Union countries using the OECD and ParlGov databases. The results showed that on average, for the European Union countries, right-wing parties tend to obtain lower levels of tax burden when compared to left-wing parties. One of the main reasons that justify this statement is the fact that non-socialist parties usually have lower levels of public expenditure leading them to lower necessity of tax revenue and consequently to lower levels of tax burden. Yet, the same results indicate that the parties located to the right side of the political spectrum tend to collect more direct than indirect taxes, preferring to tax the income of the people and companies instead of their consumption. This study can be useful for the companies and individual taxpayers, once it allows them to predict if their tax burden will increase or decrease, just by analyzing their government political orientation, creating the possibility of better tax planning.