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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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File URL: http://www.grenoble.inra.fr/Docs/pub/A2012/gael2012-02.pdf
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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 1304, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.

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