Perception of public expenditures: Theory and practice

Abstract

Public expenditures are one of the channels of communication between the government and the people. If public expenditures are carried out effectively and efficiently, voters support the ruling party by voting. However, if public expenditures are not carried out effectively and efficiently, voters punish the ruling party by voting for opposition parties. In this process, the actual and apparent increases of public expenditures also play an important role in the preferences of voters. However, in some cases, unforeseen consequences may occur. For example, while the apparent increase in public expenditures has a positive impact on voters, the actual increase in public expenditures may have a negative impact on voters. In addition, effective and efficient implementation of public expenditures can lead to loss of votes, while inefficient and ineffective public expenditures can create an increase in votes. Although this situation may seem like a contradiction, there are some concepts related to the theory of public finance at the heart. For example, fiscal illusion is a concept that can explain this contradiction. On the other hand, an increase in the number of taxpayers avoiding taxes due to loopholes in tax legislation will reveal some inefficiencies in the economy. To overcome such negative financial situations, tax compliance must be ensured. Tax consciousness is a concept that will solve such a problem. In this study, the relationship between tax consciousness and public expenditures was evaluated on different variables and analysed by means of a survey. The participants of the survey are people over the age of 18 and at least a secondary education graduate. The results reached are as follows: individuals expect efficiency and effectivity from public expenditures as a reward for the tax they pay. Moreover, a causal link is sought between the action of paying tax and public expenditures. In addition, there was a perception among the participants that there is waste and extravagance in public expenditures. Finally, the participants expressed the opinion that transparency is a determinant of trust in government policies.