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Retail Politics: Local Sales Taxes and the Fiscalization of Land Use

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  • Paul G. Lewis

    (Public Policy Institute of California)

Abstract

Policy makers may view the local sales tax as an attractive alternative to the property tax. However, if sales tax revenues are awarded to the jurisdiction where the sale occurs, local budgets are tied to the fortunes of the retail sector. In California, use of the property tax has been greatly restricted, and the local sales tax is a key source of discretionary revenues for municipalities. During the period from 1971 to 1995, as the retail sector decentralized, central cities lost substantial ground to suburbs in per capita sales tax revenues. Moreover, a survey of city managers indicates that the quest for retail development and sales tax revenues is a prime motivation for land-use decisions. Although such “fiscalization†of land-use policy is unlikely to markedly affect retail location, the California evidence suggests that the property tax has comparative merits in its ability to create incentives for more balanced development.

Suggested Citation

  • Paul G. Lewis, 2001. "Retail Politics: Local Sales Taxes and the Fiscalization of Land Use," Economic Development Quarterly, , vol. 15(1), pages 21-35, February.
    • Handle: RePEc:sae:ecdequ:v:15:y:2001:i:1:p:21-35
    DOI: 10.1177/089124240101500102
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    References listed on IDEAS

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    1. Alvin D. Sokolow, 0. "The Changing Property Tax and State-Local Relations," Publius: The Journal of Federalism, CSF Associates Inc., vol. 28(1), pages 165-187.
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    1. Sciara, Gian-Claudia & Strand, Sarah, 2017. "When Do Local Governments Regulate Land Use to Serve Regional Goals? Results of a Survey Tracking Land Use Changes that Support Sustainable Mobility," Institute of Transportation Studies, Working Paper Series qt0qr4350c, Institute of Transportation Studies, UC Davis.
    2. Robert W. Wassmer, 2008. "Causes of Urban Sprawl in the United States: Auto reliance as compared to natural evolution, flight from blight, and local revenue reliance," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(3), pages 536-555.
    3. Langer, Sebastian & Korzhenevych, Artem, 2017. "The effect of land consumption on municipal tax revenue: Evidence from Bavaria," CEPIE Working Papers 18/17, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    4. Gian-Claudia Sciara & Kristin Lovejoy & Susan Handy, 2018. "The Impacts of Big Box Retail on Downtown: A Case Study of Target in Davis (CA)," Journal of the American Planning Association, Taylor & Francis Journals, vol. 84(1), pages 45-60, January.
    5. Li Fang & Chuanhao Tian & Xiaohong Yin & Yan Song, 2018. "Political Cycles and the Mix of Industrial and Residential Land Leasing," Sustainability, MDPI, vol. 10(9), pages 1-24, August.
    6. Daria Burnes & David Neumark & Michelle J. White, 2014. "Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(1), pages 7-50, March.
    7. Burnes, Daria & Neumark, David & White, Michelle J., 2012. "Fiscal Zoning, Sales Taxes, and Employment: Do Higher Sales Taxes Lead to More Jobs in Retailing and Fewer Jobs in Manufacturing?," IZA Discussion Papers 6383, Institute of Labor Economics (IZA).

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