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Does fiscal cooperation increase local tax rates in urban areas

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  • Charlot, S.
  • Paty, S.
  • Piguet, V.

Abstract

The main purpose of this paper is to assess the effects of fiscal cooperation on local taxation in a decentralized country, using the French experience in urban municipalities. We estimate a model of tax setting for local business tax using spatial and dynamic econometric techniques, for the period 1993-2003 and an unbalanced data set. As predicted by the theory, we find that reducing the number of municipalities is likely to limit tax competition and, as a consequence, increase local business tax rates.

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Bibliographic Info

Paper provided by Grenoble Applied Economics Laboratory (GAEL) in its series Working Papers with number 201202.

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Date of creation: 2012
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Handle: RePEc:gbl:wpaper:201202

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Keywords: FISCAL COOPERATION; TAX COMPETITION; VERTICAL EXTERNALITIES; LOCAL BUSINESS TAX;

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Cited by:
  1. Edoardo Di Porto & Vincent Merlin & Sonia Paty, 2013. "Cooperation among local governments to deliver public services : a "structural" bivariate response model with fixed effects and endogenous covariate," Working Papers halshs-00787600, HAL.

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