Interregional differences in taxes and population mobility

Michel Mignolet (), Marie-Eve Mulquin () and Frédérique Denil ()

ERSA conference papers from European Regional Science Association

Abstract: Belgium is a federal state where regional fiscal competences have been increasing. In particular, the regions are now able to increase or to lower the personal income tax burden of their residents via positive and negative surcharges. Should the regions adopt the possibilities opened by the Law, would it influence interregional mobility? It is not possible to assert directly this question. However, indirect evidence of the impact of fiscal disparities on mobility can be found by analysing the mobility between municipalities. Indeed, for long, the real estate income tax and the local surcharges on the federal personal income tax have not been uniform on the Belgian territory. We tried to quantify whether those tax differences generated population moves from the more expensive municipalities to the less expensive ones. The attractiveness of the municipalities measured by means of their intra Belgium migration balance has been explained by local wealth, employment rate, quality of the local administration, proximity to the coast, three indexes constructed by a factor analysis based on a satisfaction survey, housing prices and local taxation. Our estimations showed that local tax level has no significant impact on the local migration balance. Is this observation transposable at the regional level? On one side, the answer to this question depends on the level of disparities in tax rates that such a practice would introduce. On the other side, if disparities in regional tax were to appear, interregional mobility would be slowed down by the impact of the interregional cultural differences.

Date: 2004-08
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa04p104

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