The Politics of Consumption Taxes: Globalization and the Median Voter

Abstract

The regressive nature of consumption taxes poses a challenge to partisan theory. Using data for up to 20 OECD countries in the period 1970-2003 this article aims to explore the question of whether the idea that social democratic governments typically have to compromise on policy goals and core constituency interests to make themselves more appealing to the median voter necessitates the use of regressive consumption tax policies. The results suggest that the position of the median voter determines the actions of social democratic governments regarding regressive consumption taxes when globalization is pronounced.^{^[1]} <br />Keywords: Consumption Taxes, Economic Globalization, Social Democracy, Median Voter. <br /><br clear="all" /> <br /> <br />[1] -In the case of Iran, the government has recently started to develop its tax regime in which taxes on consumption, and in particular value added taxes, become an increasingly important element of revenue collection. It would be useful to know the redistributive consequences of different levels and types of consumption taxes in Iran.