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Regional Tax Competition: Evidence from French Regions

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  • Emmanuelle Reulier
  • Yvon Rocaboy

Abstract

Reulier E. and Rocaboy Y., Regional tax competition: evidence from French regions, Regional Studies. Two mechanisms can lead to fiscal strategic interactions between local jurisdictions. The first is due to the tax base mobility. Authorities use fiscal variables to attract new resources. The second is related to information asymmetries between the politicians and the constituency. To reduce these asymmetries, voters can compare their fiscal situation with the one in neighbouring jurisdictions. These two channels lead to what can be referred to as 'mobility-led' and 'information-led' tax competition. This paper aims to discriminate between these two tax competition models in the case of the French regions. The econometric tests suggest that when taxes are paid by voters, the politicians in office seem to be involved in an 'information-led' tax competition, while in the case of taxes paid by firms, the mobility of the tax base seems to be the best way to explain strategic fiscal interactions. [image omitted] Reulier E. et Rocaboy Y., Competition fiscale regionale: une etude empirique sur les regions francaises, Regional Studies. Deux situations generent des interactions strategiques fiscales entre collectivites territoriales. D'une part lorsque les bases imposables sont mobiles, les decideurs publics utilisent les variables fiscales pour attirer ces bases sur leur territoire. D'autre part, en cas d'information asymetrique en faveur des elus, les electeurs peuvent comparer leur situation fiscale a celles des collectivites voisines pour evaluer les performances de leurs representants et les sanctionner aux elections en cas de resultats medioregstd. Ce travail vise a identifier le vecteur des interactions fiscales entre regions francaises. Ces interactions seraient principalement dues a la mobilite des bases pour la taxe professionnelle, et au comportement de comparaison pour les taxes d'habitation et fonciere batie. Competition par comparaison Competition fiscale Impots locaux Reulier E. und Rocaboy Y., Regionaler Steuerwettbewerb: Belege aus den franzosischen Regionen, Regional Studies. Es gibt zwei Mechanismen, die zu Wechselwirkungen zwischen den Fiskalstrategien verschiedener lokaler Verwaltungsbezirke fuhren konnen. Der erste Mechanismus ist in der Mobilitat des Steuerwohnsitzes begrundet. Durch Verwendung fiskaler Variablen bemuhen sich die Behorden um die Anwerbung neuer Ressourcen. Der zweite Mechanismus steht im Zusammenhang mit den Informationsasymmetrien zwischen Politikern und Wahlerschaft. Um diese Asymmetrien zu verringern, konnen die Wahler ihre fiskale Situation mit der von Wahlern in angrenzenden Verwaltungsbezirken vergleichen. Diese beiden Kanale fuhren zu einem steuerlichen Wettbewerb, der sich als 'mobilitatsgefuhrt' und 'informationsgefuhrt' bezeichnen lasst. In diesem Beitrag wird versucht, anhand des Beispiels der franzosischen Regionen zwischen diesen beiden steuerlichen Wettbewerbsmodellen zu unterscheiden. Die okonometrischen Tests lassen darauf schliessen, dass die amtierenden Politiker bei Steuern, die von Wahlern gezahlt werden, sich an einem 'informationsgefuhrten' steuerlichen Wettbewerb zu beteiligen scheinen, wahrend im Fall von Firmensteuern die Mobilitat des Steuerwohnsitzes die beste Erklarung fur strategische fiskale Wechselwirkungen zu sein scheint. Yardstick-Wettbewerb Steuerlicher Wettbewerb Lokalsteuern Reulier E. y Rocaboy Y., Competicion impositiva regional: ejemplo de las regiones francesas, Regional Studies. Existen dos mecanismos que pueden llevan a interacciones estrategicas fiscales entre las jurisdicciones locales. El primero se debe a la movilidad de base impositiva. Las autoridades usan las variables fiscales para atraer nuevos recursos. El segundo esta relacionado con las asimetrias de informacion entre los politicos y los votantes. Para reducir estas asimetrias, los votantes pueden comparar su situacion fiscal con las de jurisdicciones vecinas. Estos dos canales conducen a lo que denominamos competicion fiscal 'conducida por la movilidad' y 'conducida por la informacion'. En este articulo comparamos estos dos modelos de competicion fiscal en el caso de las regiones francesas. Las pruebas econometricas indican que cuando los votantes pagan los impuestos, los politicos en funciones parecen participar en una competicion impositiva 'conducida por la informacion', mientras que en el caso de los impuestos pagados por empresas, la movilidad fiscal parece ser la mejor manera de explicar las interacciones fiscales estrategicas. Competicion yardstick Competicion impositiva Impuestos locales

Suggested Citation

  • Emmanuelle Reulier & Yvon Rocaboy, 2009. "Regional Tax Competition: Evidence from French Regions," Regional Studies, Taylor & Francis Journals, vol. 43(7), pages 915-922.
    • Handle: RePEc:taf:regstd:v:43:y:2009:i:7:p:915-922
    DOI: 10.1080/00343400801932334
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    1. Núria Bosch & Albert Solé-Ollé, 2007. "Yardstick competition and the political costs of raising taxes: An empirical analysis of Spanish municipalities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 71-92, February.
    2. Wildasin, David E., 1988. "Nash equilibria in models of fiscal competition," Journal of Public Economics, Elsevier, vol. 35(2), pages 229-240, March.
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    5. Maarten Allers & J. Elhorst, 2005. "Tax Mimicking and Yardstick Competition Among Local Governments in the Netherlands," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 493-513, August.
    6. Craig Brett & Joris Pinkse, 2000. "The determinants of municipal tax rates in British Columbia," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(3), pages 695-714, August.
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    1. Sylvie Charlot & Sonia Paty & Virginie Piguet, 2015. "Does Fiscal Cooperation Increase Local Tax Rates in Urban Areas?," Regional Studies, Taylor & Francis Journals, vol. 49(10), pages 1706-1721, October.
    2. Swianiewicz Paweł & Łukomska Julita, 2016. "Local Tax Competition in Poland?," Miscellanea Geographica. Regional Studies on Development, Sciendo, vol. 20(3), pages 37-43, September.

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