Political tax cycles: Cyclicality of the tax burden in election periods

Kiryl V. Rudy


The article discusses changes in the tax burden in election and post-election years in countries with different levels of economic and political development. The study uses the data on 121 countries for the period between 1991 and 2019 to test two hypotheses: 1) in election years, governments tend to boost spending while in post-election years government expenditures decline, which determines a similar dynamic of the tax burden; 2) in election years the tax burden decreases and in post-election years it either increases or decreases at a slower rate than in election periods. Methodologically, the study relies on multi-factor regression analysis of panel data. As a result, the first hypothesis is confirmed for high-income countries where the governments increase their spending to ensure the incumbent’s re-election and cut their expenditures after the election. In developed countries, in election years, the government’s spending was 0.4% higher than in other periods. In developed countries, governments were motivated to raise rather than reduce the tax burden in order to compensate for their increased expenditures. No common pattern of declining tax burden in election periods was detected for all observed countries, for groups of countries by income level (high-income, middle- or low-income) or for groups of countries by political regime type (democratic and non-democratic– hybrid or authoritarian). However, the analysis of the annual data on taxes has shown that the decline in the tax burden can occur in countries with developing economic and political systems as was the case with Armenia, Russia and Ukraine in 1992–2019. In general, the findings demonstrate that the governments are more prone to using monetary and fiscal rather than tax instruments in election periods.

For citation

Rudy K.V. Political tax cycles: Cyclicality of the tax burden in election periods. Journal of Tax Reform. 2021;7(2):193–205. https://doi.org/10.15826/jtr.2021.7.2.098

 Article info

Received June 10, 2021; Revised July 20, 2021; Accepted August 14, 2021


tax burden, tax policy, political business cycles, election, political economy


Egorov G., Sonin K. The Political Economics of Non-Democracy. NBER Working Paper. No. 27949, October 2020. 55 p. https://doi.org/10.3386/w27949
2. Geddes B. Why Dictators Hold Semi-competitive Elections and Encourage the Use of Semi-Independent Courts: a Comment on Thornhill and Smirnova’s Litigation and Political Transformation. Theory and Society. 2018;47(5):595–601. https://doi.org/10.1007/s11186-018-9328-4
3. Thornhill C., Smirnova M. Litigation and Political Transformation: the Case of Russia. Theory and Society. 2018;47(5):559–593. https://doi.org/10.1007/s11186-018-9327-5
4. Drazen A. Political Economy in Macroeconomics. Princeton, NJ: Princeton University Press; 2001. 792 р.
5. Alesina A., Roubini N., Cohen G. Political Cycles and the Macroeconomy. MIT Press; 1999. 302 p.
6. Brender A., Drazen A. Political Budget Cycles in New Versus Established Democracies. NBER Working Paper. No. 10539, June 2004. 46 p. https://doi.org/10.3386/w10539
7. Berksoy T., Demir I. Political Tax Cycles: Political Effects on Tax Burden”. with Turgay Berksoy. In: Turkiye’de Vergi Kayip ve Kacaklari, Onlenmesi Yollari = Tax Evasion, Tax Erosion, and Prevention Methods in Turkey. Proceedings of XIX. Turkiye Maliye Sempozyumu. 10–14 May 2004. Belek/Antalya. Yaklasim Yayincilik; 2004, pp. 513–532. (In Turkish)
8. David P., Formanova L. Electoral Cycle and Tax Policy– Determination of Income Tax Variables: Case of the Czech Republic. Procedia – Social and Behavioral Sciences. 2016;220:95–104. https://doi.org/10.1016/j.sbspro.2016.05.473
9. Mayburov I.A., Kireenko A.P. Tax Reforms and Elections in Modern Russia. Journal of Tax Reform. 2018;4(1):73–94. https://doi.org/10.15826/jtr.2018.4.1.046
10. Pulatov A., Ahmad H. Political Business Cycles in Post-Communist European Countries. Politics & Policy. 2 July, 2021. https://doi.org/10.1111/polp.12427
11. Nordhaus W. The Political Business Cycle. The Review of Economic Studies. 1975;42(2):169–190. https://doi.org/10.2307/2296528
12. Fair R. The Effect of Economic Events on Votes for President. Review of Economics and Statistics. 1978;60(2):159–173. http://doi.org/10.2307/1924969
13. Sandel M. Justice: What’s the Right Thing to Do? Farrar, Straus and Giroux; 2009. 320 p.
14. Sandel M. The Tyranny of Merit. What’s Become of the Common Good. Farrar, Straus and Giroux; 2020. 288 p.
15. Guriev S., Papaioannou E. The Political Economy of Populism. CEPR Discussion Paper, No. DP14433. February 21, 2020. https://doi.org/10.2139/ssrn.3542052
16. Alesina A., Cohen G., Roubini N. Macroeconomic Policy and Elections in OECD Democracies. Economic and Politics. 1992;4(1):1–30. https://doi.org/10.1111/j.1468-0343.1992.tb00052.x
17. Schamis H., Way C.R. Political cycles and Exchange Rate-Based Stabilization. World Politics. 2003;56(1):43–78. https://doi.org/10/1353/wp.2004.0007
18. Koetter M., Popov A. Political Cycles in Bank Lending to the Government. The Review of Financial Studies. 2020;34(6):3138–3180. https://doi.org/10.1093/rfs/hhaa118
19. Kern A., Amri P. Political Credit Cycles. Economics & Politics. 2021;33:76–108. https://doi.org/10.1111/ecpo.12158
20. Rogoff K. Equilibrium Political Budget Cycles. The American Economic Review. 1990;80(1):21–36. Available at: https://warwick.ac.uk/fac/soc/economics/staff/vetroeger/teaching/rogoff1999_aer.pdf
21. Karagol E.T., Turhan A. External Debt, Defence Expenditures and Political Business Cycles in Turkey. Defence and Peace Economics. 2008;19(3):217–224. https://doi.org/10.1080/10242690801972170
22. Alesina A., Paradisi M. Political Budget Cycles: Evidence from Italian Cities. Economics and Politics. 2017;29(2):157–177. https://doi.org/10.1111/ecpo.12091
23. Mikesell J.L. Election periods and State Tax Policy. Public Choice. 1978;33(3):99–106. https://doi.org/10.1007/BF00154687
24. Tufte E.R. Political Control of the Economy. Princeton University Press; 1978. 168 p. Available at: https://archive.org/details/politicalcontrol0000tuft
25. Frohlich N., Oppenheimer J. Redistributive Politics: A Theory of Taxation for an Incumbent in a Democracy. Public Choice. 1990;64(2):135–153. https://doi.org/10.1007/BF00153160
26. Schuknecht L.S. Fiscal Policy Cycles and Public Expenditures in Developing Countries. Public Choice. 2000;102(1-2):115–130. https://doi.org/10.1023/A:1005026806998
27. Persson T., Tabellini G. Political Economics: Explaining Economic Policy. Cambridge, MA: MIT Press; 2000. 533 p.
28. Andrikopoulos A., Loizides I., Prodromidis K. Taxation and Political Business Cycles in EU Economics. Applied Economics. 2006;38(15):1761–1774. https://doi.org/10.1080/00036840500427106
29. Repetto L. Political Budget Cycles with Informed Voters: Evidence from Italy. The Economic Journal. 2017;128(616):3320–3353. https://doi.org/10.1111/ecoj.12570
30. Nelson M. Electoral Cycles and the Politics of State Tax Policy. Public Finance Review. 2000;28(6):540–560. https://doi.org/10.1177/109114210002800603
31. Strobl D., Back H., Muller W., Angelova M. Electoral Cycles in Government Policy Making: Strategic Timing of Austerity Reform Measures in Western Europe. British Journal of Political Science. 2021;51(1):331–352. https://doi.org/10.1017/S0007123419000073
32. Ferraresi M. Political Budget Cycle, Tax Collection, and Yardstick Competition. The B.E. Journal of Economic Analysis & Policy. 2021;21(3):1149–1161. https://doi.org/10.1515/bejeap-2020-0380
33. Demar A., Berksoy T. Political Tax Cycles: Political Effects on Tax Revenues and Tax Burden in Turkey (1945–2014). Journal of Life Economics. 2017;4(2):103–124. (In Turkish) https://doi.org/10.15637/jlecon.199
34. Beck T., Clarke G., Groff A., Keefer Ph., Walsh P. New Tools in Comparative Political Economy: The Database of Political Institutions. The World Bank Review. 2001;15(1):165–176. https://doi.org/10.1093/wber/15.1.165
35. Scartascini C., Cruz C., Keefer Ph. The Database of Political Institutions (DPI2017). Washington, DC: Inter-American Development Bank Research Department; 2018. Available at: https://publications.iadb.org/en/database-political-institutions-2017-dpi2017
36. Tabellini G., Persson T. Do Electoral Cycles Differ Across Political Systems? Working Paper, IIES, Stockholm University; 2002. https://doi.org/10.2139/ssrn.392643
37. Rudy K. Political Business Cycle: Interdisciplinary Study of Electoral and Post-Electoral Periods. Belarussian Economic Journal. 2021;(1):59–69. https://doi.org/10.46782/1818-4510-2021-1-59-69

DOI: https://doi.org/10.15826/jtr.2021.7.2.098

Copyright (c) 2021 Kiryl V. Rudy

eLibrary logoeLibrary logo  DOAJ logo ERIH PLUS logo 

© Journal of Tax Reform : ISSN 2414-9497 (online), ISSN 2412-8872 (print)