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Fiscal Autonomy and Tax Compliance:insights from Italy’s Municipal Waste Tax

Author

Listed:
  • Larysa Minzyuk

    (Ufficio Parlamentare di Bilancio)

  • Rosaria Vega Pansini

    (Ufficio Parlamentare di Bilancio)

  • Francesco Vidoli

    (Department of Economics, Society & Politics, Università di Urbino Carlo Bo)

Abstract

This paper investigates the determinants of local tax compliance focusing on Italy’s municipal waste tax (TARI). Despite the 2012 fiscal federalism reform that expanded local autonomy, fiscal evasion rates remain high and not homogeneous across territories. Using a balanced panel of 6,846 municipalities over 2017-2023, we apply a dynamic panel approach to account for endogeneity, persistence, and unobserved heterogeneity in tax collection behaviour. The results show that civic engagement significantly enhances compliance, while generalized trust exerts a negative effect, suggesting that exclusive social ties may undermine fiscal responsibility. These findings highlight the behavioural foundations of local tax performance and indicate that fiscal autonomy alone is insufficient to foster compliance without supportive social capital. To assess whether these relationships are spatially homogeneous, we extend the analysis by implementing a local System GMM estimation, which reveals substantial regional heterogeneity and underscores the spatially contingent nature of fiscal behaviour. These results call for spatially tailored fiscal policies that integrate institutional capacity with the social foundations of compliance.

Suggested Citation

  • Larysa Minzyuk & Rosaria Vega Pansini & Francesco Vidoli, 2025. "Fiscal Autonomy and Tax Compliance:insights from Italy’s Municipal Waste Tax," Working Papers 2502, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2025.
    • Handle: RePEc:urb:wpaper:25_02
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • 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
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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