Does the Parliament Ideology Affect Corporate Taxation? Evidence of EU countries

The article aims to analyse whether corporate income taxation is influenced by the prevailing ideology of parliaments (left-wing vs right-wing). The primary research method used is econometric analysis: three different estimation techniques were used on three dependent variables connected with corporate taxation. Nine models were developed to discover whether a political explanatory variable, “Centre of Political Gravity”, drives corporate taxation decisions. Additionally, variables were employed as controls: Gross Operating Surplus, 10-Year Government Bond Yield, Debt/GDP ratio and the Rule of Law index. The overall dataset is in panel format, consisting of 27 EEA countries covering 2004 to 2019. The results suggest that a parliament’s majoritarian ideology can influence the effective corporate income tax rate. It is found that left-wing parliaments tend to increase this rate.