The electoral impact of tax: a comparative study of Sweden and Australia

Abstract

The purpose of this thesis is to test a number of hypotheses concerning the electoral impact of tax by undertaking a historical and statistical analysis of the relevant evidence in Sweden, a high tax country, and Australia, a low tax country, over the period 1958 to 1988. My results give some support to all the major hypotheses tested: Sweden's higher tax levels were associated with higher tax aversion than in Australia; the largest tax rises were associated with incumbent governments losing votes at the next election; and the introduction of major new taxes was also associated with incumbent governments losing votes at the next election. Furthermore, national differences seemed to be important in that tax rises overall were associated with vote gains by the Left in Sweden but the Right in Australia. In addition, when the Right outbid the Left on promising to cut tax, the Left tended to gain in Sweden but the Right gained in Australia. In conjunction with the statistical finding that expenditure rises appeared to benefit the Left in Sweden but the Right in Australia, and that Swedes are more supportive of progressivity and income equalization than Australians, this implies that voters in Sweden were more inclined than Australian voters to focus on the benefits of increased taxation, namely expenditure and income equalization, and that in electoral terms this tended to offset the generally greater tax aversion in the Swedish electorate. One reason for this difference between the two countries is that the Left- Right party distinction on tax is much sharper in Sweden than in Australia both in reality and in the minds of the electorate. This is possibly linked to conservative control of the media in Australia, which inhibits the general dissemination of pro-tax arguments and forces Labor to compete more vigorously on tax cuts than is necessary for the Social Democrats in Sweden, where social democratic ideas do find expression in the media. The Australian media may also have contributed to the rise in tax aversion over time in Australia. My general conclusion is that although actual tax changes did help to explain election results, these effects were strongly conditioned by essentially political factors, in particular differences between the two countries concerning the nature of party competition on tax and the partisan complexion of the media. Show more