## Electoral Cycles in Tax Reforms

_IMF Working Papers, November 4, 2022_

## Source details

**Canonical URL:** [Electoral Cycles in Tax Reforms](https://www.imf.org/en/publications/wp/issues/2022/11/04/electoral-cycles-in-tax-reforms-525442)

## Other formats

- [Markdown version](/en/publications/wp/issues/2022/11/04/electoral-cycles-in-tax-reforms-525442/index.md)
- [Structured JSON version](/en/publications/wp/issues/2022/11/04/electoral-cycles-in-tax-reforms-525442/index.json)
- [Bundle manifest](/en/publications/wp/issues/2022/11/04/electoral-cycles-in-tax-reforms-525442/bundle-manifest.json)

## Bibliographic details
- Authors: Antonio David, Can Sever
- Published: November 4, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400223952.001

---

### Overview
- Study period: monthly data over the period of 1990-2018 for 22 advanced economies and emerging markets.
- Research question: examination of electoral cycles in the timing of tax reform announcements.
- Authors and date: Antonio David, Can Sever; November 4, 2022.
- Publication: IMF Working Papers, Working Paper No. 2022/216, Pages: 30, Volume: 2022, Issue: 216, DOI: https://doi.org/10.5089/9798400223952.001, ISBN: 9798400223952, ISSN: 1018-5941.

### Key findings
- Governments tend to avoid announcing tax reforms during the months running up to elections.
- Governments become more likely to announce tax reforms in the first few months following elections, indicating that “political capital” plays a role in the timing of reforms.
- The timing patterns are broad-based with respect to:
  - changes in tax base and rate; and
  - various types of taxes (including personal income tax and social security contributions).
- The pre-election decrease in the likelihood of tax reform announcements is:
  - stronger in emerging markets; and
  - weaker in countries with relatively better institutional quality.
- Neither fiscal rules nor IMF programs appear to have differential effects on electoral cycles in tax reforms.

### Methodology and subjects
- Empirical approach: probit models and econometric analysis of announcement timing.
- Subjects and keywords: Econometric analysis, Emerging and frontier financial markets, Financial markets, Fiscal policy, Fiscal rules, Personal income tax, Probit models, Social security contributions, Taxes, Political Economy.
- Keywords emphasized in the study: announcements decrease, election dummy, election variable, elections in the sample, Electoral Cycles, Global, Institutional Quality, reform announcement, Tax Reforms.

### Policy implications and interpretation
- Political timing matters: policymakers face electoral incentives that delay tax reform announcements until after elections, implying that political capital is deployed post-election to implement tax policy changes.
- Institutional quality mitigates pre-election avoidance: stronger institutions are associated with a weaker pre-election decline in reform announcements, suggesting institutional reforms could reduce politically driven timing distortions.
- External constraints: the absence of differential effects from fiscal rules and IMF programs implies these instruments, as observed in this study, do not systematically alter the electoral timing of tax reform announcements.

*Source: IMF Working Paper “Electoral Cycles in Tax Reforms” by Antonio David and Can Sever (November 4, 2022).*

---

## Content in this bundle

- **Working Paper**
  - [Working Paper (Markdown version)](/-/media/files/publications/wp/2022/english/wpiea2022216-print-pdf.pdf.md){rel="alternate" type="text/markdown"}
  - [Working Paper (PDF)](/-/media/files/publications/wp/2022/english/wpiea2022216-print-pdf.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2022/11/04/electoral-cycles-in-tax-reforms-525442_