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To What Extent Is The Local Tax Increase Appropriate?

Author

Listed:
  • Assoc. Prof. Narcis Eduard Mitu Ph. D

    (University of Craiova Faculty of Economics and Business Administration Craiova, Romania)

  • Assoc. Prof. Raluca Drăcea Ph. D

    (University of Craiova Faculty of Economics and Business Administration Craiova, Romania)

Abstract

Fiscality represents a major decision factor for investment as it represents an important cost of every business transaction regardless of its type, size or geographical location. In this respect, we find that a legislative initiative could be a solution worthy of being taken into consideration, an initiative that would allow each locality - regardless of its rank - to provide its citizens with standards in accordance with their efforts. Tax federalization may allow higher efficiency in spending public resources that are never abundant enough, and also greater political accountability. Moreover, tax federalization could also be beneficial for increasing Romania’s degree of democracy, as the decisions directly concerning the citizen are brought much closer to him/her so that he/she can control them more easily, by vote or by a proper spending of taxes he/she pays. The paper analyses the usual arguments discussed about fiscal federalization through normative and positive (public choice) approaches.

Suggested Citation

  • Assoc. Prof. Narcis Eduard Mitu Ph. D & Assoc. Prof. Raluca Drăcea Ph. D, 2010. "To What Extent Is The Local Tax Increase Appropriate?," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 2(38), pages 1-6, May.
    • Handle: RePEc:aio:aucsse:v:2:y:2010:i:6:p:189-194
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    More about this item

    Keywords

    fiscality; local tax; tax increase; tax federalization; public choice;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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