THE POLITICAL COSTS OF TAXES AND GOVERNMENT SPENDING

The marginal political costs of different types of taxes and governmen t spending, as well as voter preferences over different fiscal variabl es, are examined using two different specifications for political cost - one based on the probability of incumbent defeat and the other base d on the incumbent's percentage of the vote. Models associated with th ese two specifications, in which voting behaviour depends on disaggreg ated taxes and government expenditures, are estimated using data from Canadian provincial elections. The empirical results, which indicate t hat different types of taxes and expenditures have quite different mar ginal political costs, have important implications for models that inc orporate voter preferences.