19
production costs. It is a bipartisan model in which party
’s preferences are lexicographic, giving
priority to winning but following ideological preferences given that it wins. Concerning voters, this
model distinguishes between pragmatic majorities and social ones, and predicts what happens when
both majorities have the same ideological sign and what happens when these majorities are in
conflict. Ruling party
’s identity follows from pragmatic considerations, but tax policy becomes a
moderate equilibrium between ideological ruling party
’s preferences and social majority’s ones.
This model is tested thru a wide sample of Spanish municipalities, concerning waste collection
and treatment funding schemes. A service-specific deficit level, constructed from the difference
between service costs and service-specific poll tax revenues, which is funded by the use of the
general, more progressive municipal tax scheme, is regressed over explanatory variables including
variables reflecting pragmatic and social majorities. We use the Tobit procedure. Our empirical
estimation arrives to particular conclusions for very small municipalities, given that policymakers
in that case follow personal more than either ideological or pragmatic motivations when setting the
funding scheme. This is also due to the fact that small municipalities
’ service-specific deficits
respond more to prediction errors and difficulties to control for public accounts.
For the whole sample and above all for big municipalities, our estimations perform quite well
regarding our hypotheses. There is a clear difference between the funding schemes of a left-wing-
pragmatic-majority, left-wing-social-majority municipality and a right-wing-pragmatic-majority,
right-wing-social-majority one. Nevertheless, divergence between pragmatic majorities and social
majorities tends to moderate service funding policies. The result is an equilibrium between social
majority
’s preferences and political party’s ones.
By means of a simple model incorporating both private interests and ideology in parties
’ utility
functions, we have devised an alternative tool that contributes to explain why sometimes tax
policies become more moderate than what a simple median voter model could predict. We are
aware that there are other approaches that also could explain part of this phenomenon. One of them
refers to the uncertainty about median voter
’s preferences. Another one explains tax scheme
diversity thru a tax policy political cost minimization problem. Further research will try to combine
different assumptions in order to develop and test a more integrated model.
Convention