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Spatial Heterogeneity Patterns in the Local Business Tax Rate Across Colombian Municipalities

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  • Jesús López-Rodríguez

    (Department of Economics, University of A Coruña, A Coruña, Spain; Jean Monnet Group on EU Regional Development and Innovation - University of A Coruña (GCD) Economics and Business Administration for Society (ECOBAS), Spain)

  • Jubelly Marcela Ortiz-Muñoz

    (Universidad Autónoma Latinoamericana (UNAULA), Medellín, Colombia)

  • Brais Pociña-Sánchez

Abstract

This paper examines the spatial heterogeneity patterns of the local business tax rate (Impuesto de Industria y Comercio, ICA) across Colombian municipalities, focusing on their distribution, revenue contributions, and spatial autocorrelation patterns. Using data from the year 2022, we analyze the share of ICA in total municipal tax revenues, revealing significant disparities: while ICA accounts for approximately 40% of municipal tax revenues on average, its contribution varies widely, with "Big municipalities" (4% of total municipalities) generating 84% of ICA revenues. We employ various spatial analysis techniques, including Moran's I, Geary's C, and Join-count tests to uncover the underlying spatial dependencies. Our findings reveal significant spatial autocorrelation and clustering of ICA rates with high-tax municipalities clustering in economically developed regions (e.g., Bogotá, Antioquia) and low-tax municipalities in peripheral areas. Local Gi and Hi statistics further highlight regional disparities, suggesting that economic and administrative factors drive these patterns. The findings underscore the need for targeted fiscal policies to address spatial inequalities and enhance tax efficiency in Colombia.

Suggested Citation

  • Jesús López-Rodríguez & Jubelly Marcela Ortiz-Muñoz & Brais Pociña-Sánchez, 2025. "Spatial Heterogeneity Patterns in the Local Business Tax Rate Across Colombian Municipalities," Economic Research Guardian, Mutascu Publishing, vol. 15(1), pages 47-61, June.
    • Handle: RePEc:wei:journl:v:15:y:2025:i:1:p:47-61
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    More about this item

    Keywords

    Colombia; Spatial heterogeneity; Business tax rates; Spatial autocorrelation;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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