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If You Build It, Will They Come?: Fiscal Federalism, Local Provision of Public Tourist Amenities, and the Vision Iowa Fund

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  • Premkumar, Deepak
  • Quackenbush, Austin
  • Artz, Georgeanne M.
  • Orazem, Peter

Abstract

Iowa provided partial state funding to communities to build tourist attractions, a potential solution to local under-provision of public goods. A 10 percent increase in state funds increased county taxable retail sales by 0.1 percent. The State’s return from resulting sales tax revenue averaged 11.8 percent. Local communities paid more and received less tax, and so their return was much smaller at 1.2 percent. Neighboring community sales also increased. The positive spillovers to neighbors and the state suggest that local communities will undersupply public amenities without state subsidies.

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  • Premkumar, Deepak & Quackenbush, Austin & Artz, Georgeanne M. & Orazem, Peter, 2013. "If You Build It, Will They Come?: Fiscal Federalism, Local Provision of Public Tourist Amenities, and the Vision Iowa Fund," ISU General Staff Papers 201301010800001056, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201301010800001056
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    Cited by:

    1. Natalia Porto & Natalia Espinola, 2019. "Labor income inequalities and tourism development in Argentina: A regional approach," Tourism Economics, , vol. 25(8), pages 1265-1285, December.

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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