Taxation, health system endowment and institutional quality: ‘Social media’ perceptions across Europe

Abstract

In this paper we analyse how health system endowment and the quality of institutions impact perceptions towards taxation. We conduct a sentiment analysis of Twitter users' tweets to determine whether the impact of the Covid-19 health emergency has modified the attitudes of the citizens towards taxation in the four largest European countries: France, Germany, Italy and Spain. We use a difference-in-differences estimation strategy, comparing the average sentiments of individual tweets regarding taxation in different European NUTS-2 regions, before and after the spread of the Covid-19 pandemic. Our results highlight that in regions characterised by higher health system endowment people adopted more positive attitudes towards taxation with respect to those living in regions with low levels of health system endowment over the period 2019-2020. In addition, we show how higher quality institutions led to more positive perceptions in relative and absolute terms, suggesting a greater predisposition for a more progressive tax system.