Competition, competitiveness and municipal fiscal attractiveness. Proposal of an index for measuring the tax attractiveness of portuguese municipalities (IMAF)

Abstract

The powers of modelling of the tax burden in each municipality put the issue of municipal competitiveness on the agenda. The issue of tax competition was first raised at the level of sovereign states among themselves. Considering that municipalities may decide, in relation to their own taxes and other levies, to grant tax benefits and, in general, to reduce the municipal tax burden, this means that tax policy has become a general policy instrument of local authorities. In this context, supported by an international dogma favourable to the increasing attribution of administrative and financial autonomy to local authorities, the tax competence of Portuguese municipalities has been significantly extended, and the trend is for it to continue deepening. This study aims to analyse the direct effects of tax policy options of municipalities, on state and municipal tax attractiveness, when it comes to attracting people, resources and goods, in short, productive investment.