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The effects of tax deductibility on the mix of property taxes and use charges: an empirical analysis of the spanish case

  • Alberto Sole Olle

    (Universitat de Barcelona)

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    This paper tests some hypothesis about the determinants of the local tax structure. In particular, we focus on the effects that the property tax deductibility in the national income tax has on the relative use of the property tax and user charges. We deal with the incentive effects that local governments face regarding the different sources of revenue by means of a model in which the local tax structure and the level of public expenditure arise as a result of the maximizing behaviour of local politicians subject to the economic effects of the tax system. We attempt to test the hypothesis developed with data corresponding to a set of Spanish municipalities during the period 1987-9l. We find that tax deductibility provides incentives to raise revenues from the property tax but does not introduce a biass against user charges or in favor of overall spending growth.

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    Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 41.

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    Length: 0 pages
    Date of creation: 1998
    Date of revision:
    Handle: RePEc:bar:bedcje:199841
    Contact details of provider: Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques. Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona. Spain.
    Web page: http://www.ere.ub.es

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