Local Tax System Research Articles

Busting Myths

Andrew Kahrl's timely book, The Black Tax, examines the racial disparities present in local governmental property tax systems. By examining the property tax regime, he enters the conversation about the role of tax policy in exacerbating the racial wealth gap. The Black Tax expands the conversation about analyzing tax policies through a racialized lens.

The impact of local taxes and fees on the financial sustainability of territorial communities in times of war

The paper analyses the impact of local taxes and fees on the financial sustainability of territorial communities. The concept of financial sustainability is considered in relation to financial management, investment planning and debt control. It is noted that in the context of finance, the concept of ‘financial sustainability’ is identified with stability, security and flexibility. The author also analyses the share of local taxes and fees in the tax and total revenues of local budgets of Ukraine for the period 2021-2023. In turn, this allowed us to highlight changes in the structure of local budget revenues, in particular, changes in tax revenues and their relative contribution to total revenues. The calculated coefficients were used to highlight the role of local taxes and fees in ensuring financial sustainability on the example of the budget of the Lviv territorial community. The values of key financial indicators that characterise the level of financial sustainability of the budget of the Lviv city territorial community for the period 2021-2023 are also investigated. Using tables, the author analysed the coefficients such as the coefficient of independence, budget coverage, tax independence, budget security, subsidy and withdrawal of funds to the state budget. Fluctuations in these indicators over three years and their impact on the financial sustainability of local budgets in times of war were studied, i.e., the current state of the system of local taxes and fees was demonstrated. An important aspect of the study was the impact of the military conflict on the local taxation system in Ukraine, as in the context of the war in the country, it was necessary to consider not only the threat to security and stability, but also the economic consequences that significantly affect the financial support of local communities. Particular attention was paid to the efficient allocation of financial resources and the creation of reserve funds to ensure financial stability in unforeseen circumstances. The importance of local taxes as a key mechanism for strengthening the financial base and stability of territorial communities is highlighted, as this aspect contributes to their development and improves the quality of life of residents.

Administration of local taxes and fees: experience of European countries and current trends in Ukraine

The paper is devoted to the study of the experience of local tax administration in advanced European countries. The paper further delves into the intricacies of the local tax administration by examining the impact of cultural, economic, and political factors on the effectiveness of tax models in Germany, France, and Poland. It also explores the challenges and successes of implementing European practices within the Ukrainian framework, highlighting the need for a tailored approach that considers Ukraine’s unique socio-economic landscape. The purpose of the study is to analyze local taxation models in Germany, France and Poland, identify their advantages and disadvantages, assess the current state and prospects for the development of the local taxation system in Ukraine. A comparative analysis of legal frameworks, organizational structures and local tax administration processes in selected countries is carried out. On the basis of the collected data, a SWOT analysis is carried out, which allows to highlight the strengths and weaknesses, opportunities and threats of each of the administration models. Analysis of local tax administration models in selected countries showed that the German model is characterized by a high level of autonomy of local authorities, which contributes to the efficiency of tax collection and adaptability to local conditions. The French model is characterized by a centralized approach that ensures uniformity and control, but can limit local initiative. The Polish model integrates elements of decentralization and centralization, which allows adaptation to the specifics of the transition economy and contributes to the harmonization of the taxation system. In the Ukrainian context, modern reforms of local taxation are analyzed, introduced initiatives are studied, and the possibilities of applying the best European practices are considered. The results of the study make it possible to formulate recommendations for improving the system of local tax administration in Ukraine in order to increase its efficiency and transparency. The paper will be useful to scientists, practitioners in the field of local taxation, representatives of state bodies and all parties interested in improving the tax system.

The mechanism of high carbon economy, local tax system and urban environmental pollution: Insights from China

The mechanism of high carbon economy, local tax system and urban environmental pollution: Insights from China

Is GRDP a mediating factor in enhancing local tax revenues due to ICT development in Indonesia?

Purpose: This study aims to investigate whether the Gross Regional Domestic Product (GRDP) of the information and communication sector mediates the relationship between Information and Communication Technology (ICT) development and local tax revenue enhancement across districts and municipalities in Indonesia. Design/Methodology/Approach: This study uses a quantitative approach to examine how ICT growth, access, infrastructure and utilization affect local taxes and regional levies using panel data from 2017 to 2021.The GRDP of the information and communication sector is incorporated as a crucial moderating variable. Findings: The findings reveal that the GRDP of the information and communication sector plays a vital moderating role in the relationships between ICT factors and local taxes and levies. ICT development benefits local tax systems through increased efficiency, transparency, reduced disparities and enhanced accessibility. Effective ICT infrastructure enables digital fiscal transactions, increasing revenues while improving collection efficiency and reducing income disparities among provinces. High ICT utilization supported by technological proficiency enables local governments to enhance local taxes and levies. Practical Implications: An increase in the GRDP of the information and communication sector leads to higher tax revenues for local governments, funding public services and infrastructure development. Additionally, it attracts investments from other sectors, boosting regional levies and promoting overall regional economic development. The study highlights leveraging the GRDP of this sector as a strategic factor to enhance local tax revenue and regional levies across Indonesian provinces contributing to fiscal decentralization efforts.

Simplification of Local Taxes as an Optimization of the Budgetary Function in an Effort to Restore the National Economy in Lampung Province

Inequality of regional income with one another, hampers the development process in several regions and has not increased regional independence due to dependence on transfer of funds from the central government. This happens because the local government has not been able to optimize the source of local revenue, namely local taxes to increase local revenue. With this situation, the government seeks to simplify the local taxation system including tax types, tax rates. Regional independence is also expected to increase regional financial capacity which will have an impact on the recovery of the national economy after the pandemic. This research will be conducted normatively empirically, namely combining normative legal elements with the review of laws and regulations relating to the simplification of local taxes, which are then supported by the addition of empirical data or elements through socio-legal, statute and conceptual approaches. Based on the above, this research is expected to contribute suggestions for the implementation of regional tax simplification in Lampung Province so that the implementation of regional tax simplification can be optimal and have a positive impact on increasing regional financial capacity.

Transparency in Financial and Fiscal Affairs at Municipal Level: The Lessons from the Gandaki Province, Nepal

Transparency in Financial and Fiscal Affairs at Municipal Level: The Lessons from the Gandaki Province, Nepal

МІСЦЕВЕ ОПОДАТКУВАННЯ: СУЧАСНИЙ СТАН ТА ДОСВІД КРАЇН ЄВРОПЕЙСЬКОГО СОЮЗУ

The paper examines the formation of local taxation system in Ukraine. It has been established that the number of local taxes and fees has been significantly reduced due to the evolution in the local taxation system. Currently the list of local taxes and fees comprises two local taxes, namely the property tax and the single tax, as well as two local fees including the tourist fee and the vehicle parking fee. It is determined that the basis for local budget revenues is formed by the tax receipts which tend to increase, with the simultaneous decrease in proceeds from state administration bodies. The personal income tax is considered to be the one having the strongest effect on the formation of local budget revenues. The analysis results determine that tax revenues from local taxes and fees have a growing tendency, however they are not budget-forming for the local budgets so far. The overall increase tax revenues to local budgets are observed from the property tax and a decrease in its component – transport tax. Local fees are proved to have a negligible effect on the formation of local budget revenues. It was determined that the local authorities have no power to lay local taxes and fees, preventing them to influence the amount of tax revenues to their budgets. The administration of local taxes and fees is negatively affected by the war, since real estate objects are exempt from taxation, and there observed a decline in the entrepreneurial activity. The insufficient work of local self-government bodies in attracting local taxation opportunities provided by the decentralization reform to strengthen the local budgets financial capacity has been substantiated in the study. It is proposed to strengthen the local self-government bodies’ role in the administration of local taxes and fees, in particular by giving them an opportunity to independently choose the objects of taxation on their territories.

The Development History and Economic Characteristics of the Hungarian Local Tax System from the Change of the Regime until the Pandemic

The objective of the study is to present Hungarian local tax regulations from the change of the regime, in transition term until the period of COVID-19, with special attention in the light of changes in the legal system and their economic effects. We have divided the past three decades into three periods and, within these, we have examined local taxation item by item. In addition to the period from the change of the regime and the EU accession period, as well as the interval from EU integration to the state financial reforms of 2010, the study also pays special attention to the legislative changes introduced because of the pandemic. We are looking to answer how the local tax regulations affected the revenues of local governments and what kind of tax-mix developed in the decades following the change of the regime. The main conclusion of the study is that the changes in the local tax system have been significant since 2010, as some types of tax were phased out, while new tax types with an open list appeared. The analysis of the legal dynamics of the short period following the pandemic led to the conclusion that Hungarian local governments’ room to maneuver decreased because of the measures affecting the local tax system, and the decision-making was mainly justified by the economic conditions caused by the pandemic.

A review of Ireland’s Local Property Tax

Abstract Property taxes are common in countries around the world. Until recently, Ireland was an exception as there was no annual tax on residential property. This paper is a review of the Local Property Tax (LPT) system that was introduced in 2013 and had its first property revaluations in 2021. Using the lens of municipal finance and tax assignment, the rationale, history, features and administration of this new residential property tax are outlined. While recognising country-specific circumstances, lessons, opportunities and challenges are explored with a view to future improvements in the design and implementation of the LPT. Lessons from the LPT experience are the importance of tax administration and the role of the central tax collection agency, and, in terms of design, the need for a tailored approach to suit local circumstances. Challenges include the rates/LPT mix and the relative tax burdens on non-residential and residential properties, the long-term sustainability of the LPT arising from design issues, the current low tax rate and future revaluations, and, finally, the need for regular property tax reform because of political and taxpayers’ opposition to a highly visible, unpopular but good local tax.

부동산 관련 지방세제의 문제점과 개선방안

A local tax system is established as a taxation system that takes into account the price function for local government work and public services and the revitalization of the local economy. To strengthen the financial independence of local governments, there is a need to expand the fiscal decentralization and the size of local governments' own financial resources.
 The tax revenue from local government finances is composed mainly of local taxes, local nontax revenue, state subsidies, local grants, and local grant tax and other income. Much of the local tax is centered on property transaction tax, thereby being characterized by being closely related to the real estate business.
 A flow of real estate taxation imposes a heavy tax on multiple homeowners, thereby leading to pressuring selling as a measure to prevent a price from rising due to the lack of supply. This tax policy is functioning as a means of stabilizing the property prices and transactions by regulating real estate speculation, not the financing method that is the original purpose of the tax.
 Owing to a difference in economic conditions between regions, the inequality of local government's fiscal power poses another level of a problem. The problem of income disparity between regions makes it a rule to be dealt with at the level of national redistribution policy with the support from the central government. However, the income gap between regions can be resolved through the industrial policy or the balanced national development.

The impact of preferential farmland taxation on local public finances

Preferential taxation of farmland, which typically takes the form of use-value assessment (UVA), is a staple of local property tax systems in the United States. Under UVA, farmland is taxed according to its hypothetical value in permanent agricultural use, as opposed to its full market value, which may include capitalized future development returns that have yet to be realized by the landowner. A common criticism of UVA is that the preferential tax treatment of farmland adversely affects local property tax revenues, with other landowners footing the bill. We leverage the staggered timing of UVA adoption across states to estimate how these policies have affected various sources of local government revenue. Results broadly indicate that UVA adoption led to net reductions in property tax revenue, which were offset by transfers from state to local governments. At the state level, we find suggestive evidence that transfers were funded through increases in state-levied tax revenues, including sales taxes and corporate income tax rates, and reductions in state highway spending.

Crisis and Catharsis of Local Tax System in China

Local tax is an important ingredient of tax system in China. With the improvement of market-oriented economic system in China, reforming current local tax system, assimilating successful experience of foreign countries and establishing proper local tax system have become an objective demand, which has great significance to the development of China’s economy. In this paper, mitigation measures have been put forward in order to deal with certain problems of local tax system in China. Meanwhile, successful experience abroad has been analyzed, which can provide inspirations of reforming and improving the local tax system in China.

FINANCIAL DECENTRALIZATION IN UKRAINE IN THE CONTEXT OF EUROPEAN TRENDS

Decentralization is considered one of the most successful reforms in Ukraine. It has become a decisive factor in the social and economic development of the country. As a result of the reform, a significant amount of powers and sources of financial resources were transferred from the state authorities as close as possible to the people – to territorial communities in the form of local self-government bodies. Decentralization processes are dominant in the developed countries of the world and involve strengthening the financial autonomy of municipalities. However, in contrast to European countries, Ukraine remains a state in which extensive methods of economic development are preserved.The article is devoted to the study of the process of financial decentralization in Ukraine, which was carried out in the context of European trends. It is justified that powers between the levels of power and management should be demarcated according to the principle of subsidiarity. The article analyzes the degree of decentralization of revenues of local budgets of Ukraine and the countries of the European Union. The current system of local taxation in Ukraine has been studied. According to the results of the study, problems related to financial decentralization were identified. The search for ways to increase local communities' own incomes and ways to increase the autonomy of local self-government bodies was carried out. Proposals have been developed to improve the efficiency of tax revenue generation, which aims to help strengthen the financial independence of local budgets at the current stage of development.

Do People Smooth their After-Tax Income? Evidence from Japanese Local Tax

Abstract This study provides evidence that under the Japanese local individual income tax system, individuals smooth their after-tax income by choosing the timing of their tax payments. We construct a monthly data set of Japanese local taxes with sample periods for over 26 years. The results show that though the tax amounts are pre-determined in one-year units by the system, individuals pay more taxes during months when their incomes are high, such as in “bonus” periods, than other months in a year. The t-statistics for means indicates that there exist significant upward deviations during these months. JEL classification numbers: H31; H24; E62. Keywords: Consumption smoothing; Local income tax; Inter-temporal decision making; Mean test; Levene test.

Certain aspects of taxation at the local level

Introduction. The article considers some aspects of taxation at the local level. The legal regulation of local taxes in Ukraine is determined. The purpose of the article is to clarify certain aspects of taxation at the local level. Summary of the main results of the study. The author focuses on financial decentralization, which should result in greater autonomy of local governments in the collection of taxes and fees. It is determined that local taxes are mandatory payments, the amount of which in accordance with the legislation of Ukraine is set by the local government in the relevant territorial-administrative unit and credited to its local budget. The legal bases of local taxation in foreign countries are described. In general, the local taxation of different countries differs significantly depending on various factors, in particular, the general standard of living, socio-economic policy, the level of legal culture of citizens, the properties of the tax system, minimize possible forms of tax evasion. Powers of local self-government authorities to establish local taxes and fees in foreign countries. The most significant shortcomings of local taxation in Ukraine are emphasized, among which: insignificant fiscal role of local taxes and fees, and, consequently, low specific share in local budget revenues, in gross domestic product; a small list of local taxes and fees compared to other countries; lack of absolute independent rights of local governments to introduce their own taxes and fees on their territory; lack of interest of local authorities in attracting additional funds from local taxes and fees; lack of interdependence between the level of public services in a given area with the tax capacity of the population, etc. The focus is on the latest changes in local tax legislation and the conditions for administering certain local taxes. Conclusions. It is concluded that local taxes and fees in Ukraine play an insignificant role in the formation of local government finances compared to the revenues of local budgets of foreign countries. Proposals for improving the local taxation system in the context of financial decentralization have been developed.

LOCAL TAXATION: PROBLEMS OF CURRENT LEGISLATION

The article highlights basic problems of improving the legislative regulation of local taxation at the present stage. Institutional bases of development of the system of local taxation in Ukraine in the conditions of decentralization are substantiated. The main normative legal acts regulating the collection of local taxes and fees are analyzed. Peculiarities of collecting local taxes and fees, functions of local self-government bodies are considered. The main problems of financial decentralization and local taxation are identified, and the ways of further improvement of the mechanisms of its legal regulation are suggested. It is concluded that not only the legislative base of local taxation needs to be improved, but also the legislation on local self-government through codification. Emphasis is made on the fact that improvement of the legal framework in the field of local taxation should be based on the foundations of the current tax system and should comply with the provisions of the international regulations on local selfgovernment implemented by Ukraine.

Menelaah Narasi Kebijakan Pajak Daerah Dalam UU No. 1 Tahun 2022: Sebuah Tinjauan Literatur

The development of a local tax system is one of the policy themes of Law No. 1 of 2022. However, Law No. 1 of 2022 focuses exclusively on material tax law, such as adjustments to local tax tariffs, and makes no reference to formal tax law, such as the renewal of regional tax collecting methods. Whereas tax law can theoretically be classified into two categories, namely material tax law and formal tax law. The article employs a legal doctrinal method with a conceptual approach. This article advances the theoretical argument that fiscal decentralization is top-down in nature, that changes in local tax policy are made purely to fulfil national fiscal objectives, not to build regional tax systems in response to regional efforts. The paper begins with a discussion of fiscal decentralization, the policy narrative underlying Law No. 1 of 2022, and the pressing need to change municipal tax collecting policies. The study concludes that there is a policy imperative to strengthen municipal tax collection rules to keep pace with the policy environment's evolution in the digital and internet+ (internet plus)

How to Design An Antiracist State and Local Tax System

How to Design An Antiracist State and Local Tax System

Straight to the (Revenue) Source: Contextual and Individual-Level Determinants of Attitudes Toward Local Taxes

In this article, we investigate the relative roles of local tax policies and respondent attitudes and characteristics in shaping support for local taxes. Using a unique set of survey data collected across dozens of cities over several years, combined with contextual data on local tax systems, we can offer a comprehensive picture of who supports, and who opposes local taxes. The contributions of our approach are three-fold: We use measures of satisfaction with local taxes, using data gathered across dozens of localities; we incorporate measures of the local tax systems to help account for city-to-city variation in local tax attitudes; and we incorporate measures of racial attitudes to account for an important non-material element heretofore not incorporated in studies of local tax attitudes. Integrating these factors into an explanation of local tax policies rounds out and offers a more realistic understanding of attitudes in this critical policy area.