Suchergebnisse

This paper revisits the issue of economic voting in the context of the 1996 Presidential Election in Russia. The election was branded as a fundamental choice between capitalism and communism, yet voters were also grappling with a large crisis of personal finances: about one in two workers experienced nonpayments of wages at the time of the elections. The analysis exploits a rich nationally representative household panel dataset to identify the impact of wage arrears on the second-round election outcome. Wage arrears reduced the vote for the incumbent President Yeltsin among workers from around 65% to 49%, which amounts to a drop of 4% in the Yeltsin vote in the second round. Support for Yeltsin vote declined with the amount of wage arrears at the time of the vote and with wage arrears in 1995. Wage arrears led more voters to believe the government to be noncaring and to favor income restrictions for the rich. Political attitudes of working men changed more than those of working women.

The main message of this report is that Pakistan can take measures to increase the tax to gross domestic product (GDP) ratio by around 3.5 percentage points over the next five years. In order to ensure a healthy long-run economic development, Pakistan needs to embrace substantial changes in tax policy aimed at increasing the buoyancy of the tax system, broadening the tax bases, reducing distortions and phasing out exemptions. Such tax reforms are also required to deal with the risks stemming from sustained large budget deficits. Failing to act sooner rather than later, only makes the problem more difficult to address without considerable instability, raises the probability of fiscal and financial disarray at some point in the future, and runs the risks of further constraining policy flexibility in future. This report highlights design ingredients for a comprehensive reform of tax policy in Pakistan. In the final analysis, the success of tax reform will depend less on the mechanism of taxation and more on the politics of taxation. Beyond adequate administrative resources and an implementation strategy, this will require a clear political recognition of the importance of the task and the willingness to persist with tax reform over the long haul.