Working Paper 197

Earmarking taxes for specific expenditure categories is thought to be a crucial factor in the development of the early modern European fiscal states and remains a widespread yet fiscally rigid and often inefficient policy tool. I explore a decidedly political logic to the puzzling prevalence of tax earmarking. In this paper, I test an initial micro-behavioural condition for this political logic of earmarking: that general fund taxation may produce more political mobilisation than earmarking would, threatening the political survival of governments in lowcapacity states. I outline two interrelated mechanisms for this expectation: citizens’ discontent with the absence of government-provided information aboutthe revenue uses of taxpayers’ money and the anticipation of increased government discretion over spending policy. I design an online survey experiment with 874 citizens in Ghana to test these implications. The experiment randomly varies different proposals of how to use increased tax revenue from a recent government fiscal capacity programme and measures citizens’ intentions to engage politically. The results indicate that earmarking does not produce greater bottom-up accountability pressures than general fund taxation.


Mats Ahrenshop

Mats Ahrenshop is a postdoctoral researcher at the Department of Politics and International Relations, the University of Oxford. He holds a PhD from the University of Oxford. His research interests cover a broad range of political economy themes, ranging from political participation to state capacity and climate change.
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