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Decentralization, Competition and the local tax mix: evidence from Flanders

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  • Benny Geys

    ()
    (Wissenschaftszentrum Berlin für Sozialforschung (WZB))

  • Federico Revelli

    ()
    (University of Torino)

Abstract

This paper investigates the economic and political determinants of the local tax mix using panel data of 289 Flemish municipalities over the period 1995-2002 and estimating a system of five reduced-form tax revenue-share equations (income, property, business, user fees and other own revenues). The analysis highlights a number of important economic determinants of the observed tax mix while political variables turn out to play a relatively minor role. Finally, the analysis uncovers virtually no evidence of inter-municipal dependence in the determination of the local tax mix.

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Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2009/17.

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Length: 24 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:ieb:wpaper:2009/10/doc2009-17

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Keywords: Tax mix; Local government; Flemish municipalities; Decentralisation;

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References

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  1. Lena Edlund & Rohini Pande, 2002. "Why Have Women Become Left-Wing? The Political Gender Gap And The Decline In Marriage," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 917-961, August.
  2. Goeminne, Stijn & Geys, Benny & Smolders, Carine, 2007. "Political fragmentation and projected tax revenues: evidence from Flemish municipalities," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-03, Social Science Research Center Berlin (WZB).
  3. Rohini Pande, 2002. "Can mandated political representation increase policy influence for disadvantaged minorities? Theory and evidence from India," Discussion Papers 0102-62, Columbia University, Department of Economics.
  4. SALMON, Pierre, 1987. "Decentralization as an incentive scheme," Institut des Mathématiques Economiques – Document de travail de l’I.M.E. (1974-1993) 98, Institut des Mathématiques Economiques. LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS, Université de Bourgogne.
  5. Ashworth, John & Geys, Benny & Heyndels, Bruno, 2006. "Determinants of tax innovation: The case of environmental taxes in Flemish municipalities," European Journal of Political Economy, Elsevier, vol. 22(1), pages 223-247, March.
  6. Patricia Funk & Christina Gathmann, 2008. "Gender gaps in policy making: Evidence from direct democracy in Switzerland," Economics Working Papers 1126, Department of Economics and Business, Universitat Pompeu Fabra.
  7. Geys, Benny, 2006. "Looking across borders: a test of spatial policy interdependence using local government efficiency ratings," Discussion Papers, Research Unit: Market Processes and Governance SP II 2006-03, Social Science Research Center Berlin (WZB).
  8. Jon Fiva & Jørn Rattsø, 2007. "Local choice of property taxation: evidence from Norway," Public Choice, Springer, vol. 132(3), pages 457-470, September.
  9. Jean-François, RICHARD & Henry, TULKENS & Magali, Verdonck, 2005. "Tax interaction dynamics among Belgian municipalities, 1984-1997," Discussion Papers (ECON - Département des Sciences Economiques) 2005039, Université catholique de Louvain, Département des Sciences Economiques.
  10. Federico Revelli, 2005. "On Spatial Public Finance Empirics," International Tax and Public Finance, Springer, vol. 12(4), pages 475-492, August.
  11. Kristien Werck & Bruno Heyndels & Benny Geys, 2008. "The impact of ‘central places’ on spatial spending patterns: evidence from Flemish local government cultural expenditures," Journal of Cultural Economics, Springer, vol. 32(1), pages 35-58, March.
  12. Bucovetsky, Sam & Wilson, John Douglas, 1991. "Tax competition with two tax instruments," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 333-350, November.
  13. Jan Vermeir & Bruno Heyndels, 2006. "Tax policy and yardstick voting in Flemish municipal elections," Applied Economics, Taylor & Francis Journals, vol. 38(19), pages 2285-2298.
  14. Eggert, Wolfgang & Haufler, Andreas, 1999. "Capital taxation and production efficiency in an open economy," Economics Letters, Elsevier, vol. 62(1), pages 85-90, January.
  15. Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, vol. 76(5), pages 1086-1102, December.
  16. Hettich, Walter & Winer, Stanley L, 1988. "Economic and Political Foundations of Tax Structure," American Economic Review, American Economic Association, vol. 78(4), pages 701-12, September.
  17. Per Tovmo, 2007. "Budgetary Procedures and Deficits in Norwegian Local Governments," Economics of Governance, Springer, vol. 8(1), pages 37-49, January.
  18. Svaleryd, Helena, 2002. "Femal Representation - Is it Important for Policy Decisions?," Research Papers in Economics 2002:7, Stockholm University, Department of Economics.
  19. Winer, Stanley L. & Hettich, Walter, 1991. "Debt and tariffs : An empirical investigation of the evolution of revenue systems," Journal of Public Economics, Elsevier, vol. 45(2), pages 215-242, July.
  20. Hettich, Walter & Winer, Stanley, 1984. "A positive model of tax structure," Journal of Public Economics, Elsevier, vol. 24(1), pages 67-87, June.
  21. Clemens Fuest & Bernd Huber & Jack Mintz, 2003. "Capital Mobility and Tax Competition: A Survey," CESifo Working Paper Series 956, CESifo Group Munich.
  22. Lawrence Kenny & Stanley Winer, 2006. "Tax Systems in the World: An Empirical Investigation into the Importance of Tax Bases, Administration Costs, Scale and Political Regime," International Tax and Public Finance, Springer, vol. 13(2), pages 181-215, May.
  23. John R. Lott & Jr. & Lawrence W. Kenny, 1999. "Did Women's Suffrage Change the Size and Scope of Government?," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1163-1198, December.
  24. Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 89-101, March.
  25. John Ashworth & Benny Geys & Bruno Heyndels, 2005. "Government Weakness and Local Public Debt Development in Flemish Municipalities," International Tax and Public Finance, Springer, vol. 12(4), pages 395-422, August.
  26. Revelli, Federico & Tovmo, Per, 2007. "Revealed yardstick competition: Local government efficiency patterns in Norway," Journal of Urban Economics, Elsevier, vol. 62(1), pages 121-134, July.
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Cited by:
  1. Asatryan, Zareh & Baskaran, Thushyanthan & Heinemann, Friedrich, 2014. "The effect of direct democracy on the level and structure of local taxes," ZEW Discussion Papers 14-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Witte, Kristof De & Geys, Benny, 2011. "Evaluating efficient public good provision: Theory and evidence from a generalised conditional efficiency model for public libraries," Journal of Urban Economics, Elsevier, vol. 69(3), pages 319-327, May.
  3. José da Silva Costa & Armindo Cravalho, 2013. "Yardstick Competition among Portuguese Municipalities: The Case of Urban Property Tax (IMI)," FEP Working Papers 495, Universidade do Porto, Faculdade de Economia do Porto.

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