Tax Earmarking and Political Participation: A Survey Experiment in Ghana

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 oftentimes 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 mobilization than earmarking would, threatening political survival of governments in low-capacity states. I outline two interrelated mechanisms for this expectation: citizens' discontent with the absence of government-provided information about the revenue uses of taxpayers' money, and anticipation of increased government discretion over spending policy. I design an online survey experiment with 1,000 citizens in Ghana to be conducted in the fall of 2023 to test these implications. The experiment randomly varies different proposals of how to use increased tax revenue from a recent government fiscal capacity program and measures citizens' intentions to engage politically. Results from this study have important implications for our understanding of the political underpinnings of tax policy and the tax-mediated relationship between citizens and the state.