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Regional Competition On Tax Administration

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  • Luca Salvadori

    ()

  • José María Durán-Cabré
  • Alejandro Esteller-Moré

Abstract

The tax auditing parameters have scarcely been analyzed by the literature as relevant policy-making instruments; however the enforcement strategies are crucial elements of the tax burden. In this paper we show that in a federal framework the tax auditing policies could represent additional tools on which regional institutions can interact between them. We investigate the presence of this interaction by means of a spatial econometric approach. We employ a time-space recursive model that accounts for sluggish adjustment in the auditing policies obtaining results congruent with standard theory and corroborating the presence of horizontal competition between regions on tax auditing policies. Moreover we find that once regional governments have legal power, the opaque competition on enforcement policies disappears and supposedly it switches to a more transparent competition on statutory tax parameters. Keywords: tax administration and auditing, fiscal competition, fiscal federalism JEL Classification: H71, H77, H83

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa12p184.

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Date of creation: Oct 2012
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Handle: RePEc:wiw:wiwrsa:ersa12p184

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  10. Brülhart, Marius & Parchet, Raphaël, 2011. "Alleged Tax Competition: The Mysterious Death of Bequest Taxes in Switzerland," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8665, C.E.P.R. Discussion Papers.
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  14. Alejandro Esteller-Moré, 2005. "Is There a Connection Between the Tax Administration and the Political Power?," International Tax and Public Finance, Springer, Springer, vol. 12(5), pages 639-663, September.
  15. Leonzio Rizzo & Alejandro Esteller - Moré, 2011. "US Excise Tax Horizontal Interdependence: Yardstick vs. Tax Competition," Working Papers 201116, University of Ferrara, Department of Economics.
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