Property taxation as incentive for cost control:Empirical evidence for utility services in Norway

Lars-Erik Borge () and Jorn Rattso

Working Paper Series from Department of Economics, Norwegian University of Science and Technology

Abstract: Recent theoretical research suggests that property taxation has incentive effects that can help control cost problems in the public sector. The institutional setting in Norway allows this first empirical investigation of the incentive effect of property taxation, since we can separate between local governments with and without property tax. The raw data of the variation in the unit cost level for utilities show that local governments with property tax have about 20% lower unit cost. Using both linear regression and propensity score matching, we are not able to wash out the difference in unit costs. Our interpretation is that having a visible and controversial local tax related to property stimulates voter interest in local government activities and thereby may help cost control. The incentive effect is of interest for the design of fiscal federalism.

Keywords: Property tax; incentive effects; public sector costs; matching (search for similar items in EconPapers)
JEL-codes: H71 H72 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2006-09-19
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
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Citations: View citations in EconPapers (2)

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http://www.svt.ntnu.no/iso/WP/2006/12LEBJR_EER.pdf (application/pdf)

Related works:
Journal Article: Property taxation as incentive for cost control: Empirical evidence for utility services in Norway (2008)
Working Paper: Property taxation as incentive for cost control: Empirical evidence for utility services in Norway (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:nst:samfok:7606

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