Participatory Budgeting and Willingness to Pay Taxes: Evidence from an Exploratory Sequential Mixed Methods Study
Open AccessParticipatory Budgeting (PB) is a democratic budgetary decision-making process through which public citizens come together and decide on how to spend a part of the public budget (The Participatory Budgeting Project, 2017). It has initiated in Porto Alegre, Brazil, in the late 1980s and has diffused throughout different cities, regions, and countries. PB is now widely recognized to be an exemplary democratic governance practice, which has brought tangible positive impacts such as increasing civic engagement in public administration and policymaking. It has promoted accountability in the public sector, and enhanced the quality of public service delivery and raised tax revenue collection (Sintomer et al., 2008; Beuermann and Amelina, 2014; Cabannes, 2015). I drew my research motivation from the observed association between PB and increased tax revenues in municipalities where PB has been implemented discussed in several previous PB literature. Through reviewing the current state-of-the-art of the PB research, I identify a gap that there is room for inquiry on how democratic platforms like PB elicit people’s budget preferences and policy priorities, and how and to what extent PB participation can influence people’s willingness to pay taxes. In other words, the fundamental question of this research is what if people are given opportunities to witness how their tax money is spent, how does this affect people’s perception of taxes. To address such research gap and achieve my research goals, I pose the following research questions: 1) How are individual taxpayer’s budget preferences policy needs reflected in the PB process, and what is the key driver that elicit people’s preferences; 2) How and to what extent does participating in PB influence people’s willingness to pay taxes? To explore answers to the research questions, I applied an exploratory sequential mixed methods research design (Creswell and Plano Clark, 2011). I addressed the first research question by using qualitative methods, mainly in-depth interviews, with a focus on the PB models implemented in New York City and Chicago. I find that PB has key mechanisms that elicit people’s budget preferences, such as direct voting on budget proposals. It has key drivers such as leadership, transparency and openness, and the level of discretion given to administrators. However, I also identify a key gap in transparency, which is one of the core values of PB, between its intended goal and how people perceive transparency in PB in reality. For example, people want to see more real-time communications and be able to track results timely once their voting is complete. Based on the findings from the qualitative research, I implemented a randomized vignette survey experiment through the Amazon Mechanical Turk (MTurk) and Turkprime platforms for the second research question. Participants were randomly assigned to various treatment scenarios with different policy messages. Through conducting linear regression with the binary dependent variable, binary logistic regression, and ordered logistic regression analyses, I find that: 1) PB intervention increases the probability of tax compliance; 2) PB with no transparency treatment decreases the probability of tax compliance. On the probability of willingness to pay higher taxes, PB has no statistically significant impact. Still, if PB is not transparent, it significantly decreases the probability of willingness to pay higher taxes. The findings imply that PB is effective on raising tax morale to some degree. At the same time, PB needs redesigning to promote effectiveness, particularly strengthening transparency mechanisms. My contribution to building new knowledge in the field is to shed more light on the impacts of PB on an individual’s motivation, particularly unpacking the mechanisms of the linkage between PB and increased tax compliance by adding behavioral insights. It is significant given its relatively scant attention in the up-to-date PB research. Also, this research will draw critical policy implications on how to make improvements on PB, particularly on strengthening transparency and accountability mechanisms.
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