Preferential tax treatment – a political or economic tool?

Monika Banaszewska

Regional Studies, 2022, vol. 56, issue 8, 1377-1390

Abstract: This paper investigates whether the scope of preferential tax treatment depends on the political strength of the incumbent mayor. A dataset on real estate taxes in Polish municipalities in 2005–17 is used. More tax revenues are foregone in municipalities governed by politically weak mayors, albeit the uncovered relationship has limited economic significance. It is tentatively found that the preferential tax policy has a slightly negative, if any, effect on municipal revenues. As such, it is rather a political than an economic tool. Less popular mayors offer higher reductions towards natural persons and in the form of tax rate reductions.

Date: 2022
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DOI: 10.1080/00343404.2021.1978420

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