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Local Option Sales Tax (LOST) Policy on the Urban Fringe


  • Rogers, Cynthia L.


Many state legislatures grant local governments the authority to enact sales taxes on retail sales transactions that occur within local jurisdictions. Local government reliance on these local option sales tax (LOST) revenues is increasing. In many states, including Oklahoma, municipal governments are unrestricted as to the LOST rate that can be imposed. The ability to generate LOST revenues, however, may depend on many factors outside a local government’s domain, including proximity to large, urban retail centers, and tax competition from other localities. This paper investigates aspects of LOST policy for municipal governments located on the urban fringe using all Oklahoma municipalities that imposed a LOST from 1990 to 2001. An important finding is that the revenue impact of increasing LOST rates (i.e., the LOST tax elasticity) depends on the urban influence measure. The implications are important for guiding nonmetropolitan municipal governments in the determination of LOST policy

Suggested Citation

  • Rogers, Cynthia L., 2004. "Local Option Sales Tax (LOST) Policy on the Urban Fringe," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 34(1).
  • Handle: RePEc:ags:jrapmc:132272

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    References listed on IDEAS

    1. Poterba, James M., 1996. "Retail Price Reactions to Changes in State and Local Sales Taxes," National Tax Journal, National Tax Association, vol. 49(2), pages 165-176, June.
    2. Walsh, Michael J. & Jones, Jonathan D., 1988. "More Evidence on the "Border Tax" Effect: The Case of West Virginia, 1979-84," National Tax Journal, National Tax Association, vol. 41(2), pages 261-65, June.
    3. John L. Mikesell & C. Kurt Zorn, 1986. "Impact of the Sales Tax Rate on its Base: Evidence from a Small Town," Public Finance Review, , vol. 14(3), pages 329-338, July.
    4. A.F. Aisha Ghaus, 1995. "Optimal Local Sales Tax," Urban Studies, Urban Studies Journal Limited, vol. 32(8), pages 1369-1381, August.
    5. John D. Wong, 1996. "The Impact Of Local Option Sales Taxes On Retail Sales, Employment, Payrolls, And Establishments: The Case For Kansas," The Review of Regional Studies, Southern Regional Science Association, vol. 26(2), pages 166-176, Fall.
    6. J. L. Love, 1992. "Local Sales Tax Options: A Case Study Of South Georgia," The Review of Regional Studies, Southern Regional Science Association, vol. 22(1), pages 105-114, Summer.
    7. Ronald C. Fisher, 1980. "Local Sales Taxes: Tax Rate Differentials, Sales Loss, and Revenue Estimation," Public Finance Review, , vol. 8(2), pages 171-188, April.
    8. Poterba, James M., 1996. "Retail Price Reactions to Changes in State and Local Sales Taxes," National Tax Journal, National Tax Association, vol. 49(2), pages 165-76, June.
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    Cited by:

    1. Stallmann, Judith I., 2010. "Institutions and Comparative Regional Research," The Review of Regional Studies, Southern Regional Science Association, vol. 40(2), pages 145-158.
    2. repec:bla:pbudge:v:37:y:2017:i:4:p:25-46 is not listed on IDEAS
    3. Maureen Kilkenny, 2010. "Urban/Regional Economics And Rural Development," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 449-470.
    4. Agrawal, David R., 2014. "LOST in America: Evidence on local sales taxes from national panel data," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 147-163.
    5. Rossitza B. Wooster & Joshua W. Lehner, 2010. "Reexamining The Border Tax Effect: A Case Study Of Washington State," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 511-523, October.
    6. Saxon, Nicholas & Tosun, Mehmet S. & Yang, Jingjing, 2015. "State and Local Sales Taxes and Business Activity in the United States," IZA Discussion Papers 9413, Institute for the Study of Labor (IZA).


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