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Public support for tax policies in COVID-19 times: evidence from Luxembourg
Javier Olivera1,2,3, Philippe Van Kerm1,4
1Luxembourg Institute of Socio-Economic Research (LISER), Esch-sur-Alzette, Luxembourg.
Abstract:
We study attitudes towards the introduction of hypothetical new taxes to finance the cost of the COVID-19 pandemic. We rely on survey data collected in Luxembourg in 2020. The survey asks for the agreement of respondents over: a one-time net wealth tax, an inheritance tax, a temporary solidarity income tax, and a temporary increase in VAT. All questions include different and randomly assigned tax attributes (tax rates and exemption amounts). We find a clear divide with relatively high support for new wealth and inheritance taxes on the one hand and a low support for increases in VAT and income taxes on the other hand. While 58% of respondents agree or strongly agree with a one-time tax levied on net worth, only 24% are in favor of a small increase in VAT. Support for any tax is however negatively associated with the size of the tax as measured by the predicted revenues. Our results indicate that a one-time wealth tax could raise substantial revenues and still garner public support.
Supplementary Information:
The online version contains supplementary material available at 10.1007/s10797-022-09744-y.
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