According to the Leviathan Model, fiscal federalism is a binding constraint on revenuemaximizing government. The competitive pressure of fiscal federalism reduces public sector size, as compared to unitary states. This study uses panel data of Swiss cantons from 1980 to 1998 to empirically analyze the effect of different instruments on government revenue and its structure. Because of the considerable tax autonomy of sub-national Swiss governments, it is possible to investigate different mechanisms by which fiscal federalism may influence government size. The results indicate that tax exporting has a revenue-expanding effect; whereas, tax competition favors a smaller size of government. Fragmentation has no robust effect on the size of government revenue for Swiss cantons. The overall effect of revenue decentralization leads to fewer tax revenues but higher user charges. Thus, revenue decentralization favors a smaller size of government revenue and shifts government revenue from taxes to user charges. JEL Classification: D7, D72, H71It is better to keep the wolf out of the fold, than to trust to drawing his teeth and claws after he shall have entered.

Tax morale, Shadow economy, Tax compliance, Tax evasion, Local autonomy, Federalism, Institution, H260, H730, D700,

No abstract

In many countries, thinking about a (new) tax amnesty is currently in vogue. However, international experience shows that the financial success of such a tax amnesty is not guaranteed, in part because it is thought that tax amnesties may over time undermine tax compliance. This article conducts experiments in two different countries (Switzerland and Costa Rica) to examine the effects of amnesties on compliance. In contrast to other experiments, these experiments analyze the relationship between tax compliance and subjects’ possibility to vote for or against an amnesty. The results suggest that tax compliance only increases after voting, when people get the opportunity to discuss the amnesty prior to voting. Thus, voting with discussion may induce a kind of civic duty, as taxpayers become aware of the importance of contributing to the provision of public goods.