Public Preferences Regarding Government Spending and Taxes

A total of 5,293 adults made eight choices between packages varying spending on infrastructure, social welfare, defence and education, combined with variations in the income tax and VAT. Conditional logit estimates show that an additional €20 billion in annual education spending raises a package’s choice probability by 8.3 percentage points. Higher infrastructure investment is also valued positively, while support for additional social welfare and defence spending does not increase further above €10 billion. Tax increases reduce support much more than equivalent tax cuts increase it. Raising the standard VAT rate from 19 to 21 per cent lowers choice probability by 13.5 percentage points. Willingness to finance additional spending through higher taxes is limited. For €10 billion in additional education spending, respondents accept around €11.5 billion in additional income tax or €9.3 billion in VAT. Even here, full tax financing does not yield a statistically established gain in support. Preferences differ by party affiliation and socio-economic characteristics. The findings support prioritizing spending on education in budget reallocations, but do not establish majority support for specific reforms.