Tax interaction dynamics among Belgian municipalities 1984-1997
The purpose of this paper is to test econometrically the existence of fiscal interactions between Belgian municipalities. At the time of writing, the motivation was to provide scientific support to the lively debate on fiscal competition that took place among Belgian politicians in the late nineties. Two types of taxes are considered, for which Belgian municipalities have the decision power as to rates: the 'centimes additionnels' on the personal income tax and the 'précompte immobilier' which is a property tax. A dynamic adjustment model is specified and estimated using panel data for 598 municipalities over 15 years. The empirical results obtained bear upon two main points: (i) Some interaction definitely has prevailed between the municipalities' fiscal choices made during the observation period, for both taxes; (ii) However, the adjustment reactions to the other municipalities' fiscal choices have occurred over time at the very low yearly pace of 6% and 10%, respectively, of the discrepancy between the actual rates and the preferred rates.
|Date of creation:||00 Jul 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nickell, Stephen, 1985. "Error Correction, Partial Adjustment and All That: An Expository Note," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 47(2), pages 119-29, May.
- Tim Besley & Harvey S. Rosen, 1997.
"Vertical externalities in tax settings: evidence from gasoline and cigarettes,"
IFS Working Papers
W97/23, Institute for Fiscal Studies.
- Besley, Timothy J. & Rosen, Harvey S., 1998. "Vertical externalities in tax setting: evidence from gasoline and cigarettes," Journal of Public Economics, Elsevier, vol. 70(3), pages 383-398, December.
- Timothy J. Besley & Harvey S. Rosen, 1999. "Vertical Externalities in Tax Setting: Evidence from Gasoline and Cigarettes," NBER Working Papers 6517, National Bureau of Economic Research, Inc.
- Masayoshi Hayashi & Robin Boadway, 2001. "An empirical analysis of intergovernmental tax interaction: the case of business income taxes in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 481-503, May.
- Goodspeed, Timothy J., 1998. "Tax Competition, Benefit Taxes, and Fiscal Federalism," National Tax Journal, National Tax Association, vol. 51(n. 3), pages 579-86, September.
- Lars P. Feld & Gebhard Kirchgässner, 2000.
"Income Tax Competition at the State and Local Level in Switzerland,"
CESifo Working Paper Series
238, CESifo Group Munich.
- Feld, Lars P. & Kirchgassner, Gebhard, 2001. "Income tax competition at the State and Local Level in Switzerland," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 181-213, April.
- Heyndels, Bruno & Smolders, Carine, 1994. " Fiscal Illusion at the Local Level: Empirical Evidence for the Flemish Municipalities," Public Choice, Springer, vol. 80(3-4), pages 325-38, September.
- Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
- Brueckner, Jan K., 1998. "Testing for Strategic Interaction Among Local Governments: The Case of Growth Controls," Journal of Urban Economics, Elsevier, vol. 44(3), pages 438-467, November.
- Goodspeed, Timothy J., 2002.
"Tax competition and tax structure in open federal economies: Evidence from OECD countries with implications for the European Union,"
European Economic Review,
Elsevier, vol. 46(2), pages 357-374, February.
- Goodspeed, Timothy J., 1999. "Tax competition and tax structure in open federal economies: evidence from OECD countries with implications for the European Union," ZEW Discussion Papers 99-39, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Anne Case, 1993. "Interstate tax competition after TRA86," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 136-148.
- Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 89-101, March.
- Ashworth, John & Heyndels, Bruno, 1997. "Politicians' preferences on local tax rates: An empirical analysis," European Journal of Political Economy, Elsevier, vol. 13(3), pages 479-502, September.
- Bruno Heyndels, 1990. "De financierïng van de gewesten via een aanvullende personenbelasting en de betekenis hiervan voor de Belgische gemeenten," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 127, pages 307-336.
- Timothy Besley & Anne Case, 1992.
"Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition,"
NBER Working Papers
4041, National Bureau of Economic Research, Inc.
- Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
- Réjane Hugounenq & Jacques Le Cacheux & Thierry Madiès, 1999. "Risques de concurrence fiscale en Europe," Sciences Po publications info:hdl:2441/2142, Sciences Po.
- Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
- Hines, James R. Jr., 1999. "Lessons from Behavioral Responses to International Taxation," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 305-22, June.
- Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-92, December.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2005048. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)
If references are entirely missing, you can add them using this form.