Spatial Heterogeneity Patterns in the Local Business Tax Rate Across Colombian Municipalities

Jesús López-Rodríguez (), Jubelly Marcela Ortiz-Muñoz () and Brais Pociña-Sánchez ()
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Jesús López-Rodríguez: Department of Economics, University of A Coruña, A Coruña, Spain; Jean Monnet Group on EU Regional Development and Innovation - University of A Coruña (GCD) Economics and Business Administration for Society (ECOBAS), Spain
Jubelly Marcela Ortiz-Muñoz: Universidad Autónoma Latinoamericana (UNAULA), Medellín, Colombia

Economic Research Guardian, 2025, vol. 15, issue 1, 47-61

Abstract: This paper examines the spatial heterogeneity patterns of the local business tax rate (Impuesto de Industria y Comercio, ICA) across Colombian municipalities, focusing on their distribution, revenue contributions, and spatial autocorrelation patterns. Using data from the year 2022, we analyze the share of ICA in total municipal tax revenues, revealing significant disparities: while ICA accounts for approximately 40% of municipal tax revenues on average, its contribution varies widely, with "Big municipalities" (4% of total municipalities) generating 84% of ICA revenues. We employ various spatial analysis techniques, including Moran's I, Geary's C, and Join-count tests to uncover the underlying spatial dependencies. Our findings reveal significant spatial autocorrelation and clustering of ICA rates with high-tax municipalities clustering in economically developed regions (e.g., Bogotá, Antioquia) and low-tax municipalities in peripheral areas. Local Gi and Hi statistics further highlight regional disparities, suggesting that economic and administrative factors drive these patterns. The findings underscore the need for targeted fiscal policies to address spatial inequalities and enhance tax efficiency in Colombia.

Keywords: Colombia; Spatial heterogeneity; Business tax rates; Spatial autocorrelation (search for similar items in EconPapers)
JEL-codes: C21 H71 H77 R12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:15:y:2025:i:1:p:47-61

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