Local Governments Tax Autonomy, Lobbying, and Welfare

Sandro Brusco, Luca Colombo and Umberto Galmarini (umberto.galmarini@uninsubria.it)
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Umberto Galmarini: Università dell'Insubria

No ief0097, DISCE - Quaderni dell'Istituto di Economia e Finanza from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: What degree of tax autonomy should be granted to a regional government on a local tax base? Although the regional policy maker aims at maximizing social welfare, her tax policy may be distorted by the lobbying activity of local taxpayers. In this political environment we characterize the conditions under which social welfare can be increased by restricting the set of tax instruments available to the local policy maker, i.e. the degree of local tax autonomy. We show that full tax autonomy is likely to be dominated by minimal tax autonomy when there are many groups of similar size, while the converse occurs when tax bases are asymmetrically distributed.

Keywords: Tax autonomy; lobbying; local public good provision. (search for similar items in EconPapers)
JEL-codes: D70 H71 H77 (search for similar items in EconPapers)
Pages: 30
Date: 2010-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Local Governments Tax Autonomy, Lobbying, and Welfare (2010)
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