Does Fiscal Cooperation Increase Local Tax Rates in Urban Areas?

Abstract

Charlot S., Paty S. and Piguet V. Does fiscal cooperation increase local tax rates in urban areas?, Regional Studies. The main purpose of this paper is to assess the effects of fiscal cooperation on local taxation in a decentralized country using experience in French urban municipalities. A tax-setting model for local business tax is estimated, using spatial and panel econometric techniques, for the period 1993–2003. Controlling for population size, it is found that fiscal cooperation is likely to reduce tax competition and, as a consequence, to increase local business tax rates.