International taxation sentiment and COVID-19 crisis

Abstract

Investigating public sentiment regarding tax policy during the COVID-19 pandemic could be useful for understanding the experiences across societies. Using Linguistic Inquiry and Word Count to investigate and quantitatively measure the pandemic's effect-from January 25 to April 9, 2020-on the sentiment regarding possible tax policies throughout the world, thereby determining that, overall, taxation sentiment is reduced as the number of confirmed COVID-19 cases grows. Further investigation reveals that, as COVID-19 spreads, the sentiment for raising taxes decreases and that for reducing taxes increases, and this effect is mitigated by countries' democracy. We further find that news sentiment in unofficial media and in countries with low social trust is more significantly affected by COVID-19. Robustness tests performed using different subsamples of developed and developing countries and different pandemic circumstances validate our findings. This research has crucial implications for policy evaluation and development.

Keywords: COVID-19; Democratic accountability; Sentiment; Taxation.

Fig. 1

Taxation Sentiment and COVID-19. Tone refers to a country’s taxation sentiment, and Confirmed is the growth rate of a country’s confirmed COVID-19 cases. Tone is taking the average at the country level over the sample period. Confirmed is at the country level, taking the average over the sample period. The line indicates a downward-sloping trend.

Fig. 2

Taxation Sentiment and COVID-19 (Germany). Tone refers to taxation sentiment, and Confirmed is the growth rate of a country’s confirmed COVID-19 cases. Tone is at the average daily level, and Confirmed is at the daily level. Negative correlations are presented in the images.