We study, using micro survey data, the effect on household spending of the unexpected increase in the property tax in Italy, which formed a large part of a fiscal consolidation package enacted by the government in 2012. We use partial identification methods that depend on very weak assumptions to construct informative identification regions both for the average and the quantile treatment effects. We find that the tax increase has a substantial negative effect on non-durable expenditure both at the mean and the upper half of the expenditure distribution. We also find a large negative effect on the expenditure on durables, both at the mean and at the 90th quantile. Counterfactual policy experiments indicate that the property tax increase can generate high tax losses because it substantially reduces household spending.
