Elections and Taxes in Developing Countries: What Competitive Races Reveal About Government Behavior

In many developing nations, elections are thought to influence fiscal policy through pre-election spending. However, this study finds that general elections do not significantly affect tax collection. Instead, competitive elections lead to reduced tax collections before the polls close—a phenomenon particularly pronounced when voters dislike incumbents.

The research leverages enhanced data sets and political budget cycle analysis focusing on taxation patterns across diverse developing economies. Results demonstrate a clear link between electoral competition and lower pre-election tax revenue, with the effect intensifying against unpopular governments.

This finding suggests several crucial dynamics:

• Political incentives to raise revenue are more pronounced in competitive elections than general ones.
• Incumbents may strategically reduce taxes as an alternative form of spending when facing viable opponents.
• Taxpayer resistance appears amplified during periods of strong opposition, potentially serving as a check on government policy.

These insights offer fresh perspectives on how democratic accountability operates differently in developing countries' fiscal contexts.