Cultural Patterns and the Structure of Tax Revenue and Public Expenditures: An International Perspective
Cultural Patterns and the Structure of Tax Revenue and Public Expenditures: An International Perspective

Summary/Abstract: This study examines the link between cultural patterns and fiscal policy in 29 EU/EFTA countries. Using Ward’s clustering on Hofstede’s dimensions, five groups were formed. Results confirm that cultural clusters share similar tax and expenditure structures. Regression analysis shows that a 1% increase in individualism raises tax revenues by 0.686% and spending by 0.655% (social +0.740%, human capital +0.364%, classical +0.375%, economic +0.340%). A 1% rise in long-term orientation increases indirect tax shares by 0.717% and income taxes by 0.340%. Uncertainty avoidance (+1%) correlates with higher tax revenues (+0.164%) and indirect taxes (+0.298%). Dimensions like individualism, uncertainty avoidance, masculinity, restraint, and power distance differentiate expenditure structures. These findings indicate that cultural patterns significantly influence fiscal policies, posing challenges for a uniform EU fiscal model.

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