H71 - State and Local Taxation, Subsidies, and RevenueReturn

As public institutions are faced with more diverse and increased community needs, significant concern arises (both in academia and practice) for the dwindling resources available at the local level and the factors which can influence local revenue mobilization. Using data for 3,227 Romanian territorial-administrative (all Romanian territorial administrative units except Bucharest - the capital city), this research compares local revenue mobilization (calculated as: effectively collected revenues, as a share of what was predicted at the beginning of the budgetary year) for the 2008 - 2011 period, trying to determine if the type of a territorial administrative unit influences its public revenue mobilization. The post hoc ANOVA showed that the type of a local institution (be it commune, city, municipality, county or sector) does not affect the level of revenue collection (proxied by collected/predicted revenues); where such relationships between these two variables were found, they were rather spurious and did not surfaced across the entire dataset.

The article deals with the issue of tax decentralization to local government. The aim of the article is to describe the tax decentralization to local governments with respect to its possible determinants and to verify empirically the relevancy of theoretical factors generally explaining fiscal decentralization to the tax decentralization. The analysis is based on data panel of OECD-European covering the period of 1995 to 2013. Upon these data we build panel regression model. Estimated equations provide support for the hypotheses that the countries with larger geographical area tend to decentralize more tax revenue to local governments. Surprisingly, the slope parameters of population and population density have negative sign and are statistically significant. The real GDP per capita proved to be a significant factor of tax decentralization. The inequality of household income, as well as the share of urban population, although having correct sign, is not statistically significant. The size of redistribution function is highly statistically significant, suggesting that countries with higher redistribution decentralize more taxes to local government. The heterogeneity variable showed results with correct sign, where religious and language fractionalization were statistically significant. The very fact that the country is or is not federated or belong or not to group of Central and Eastern European Country seems to be unimportant for tax decentralization to local government level.

The article provides direct empirical evidence on fiscal decentralisation and economic development in selected European countries in a period 1995-2012. The research (based on data taken from OECD Fiscal Decentralisation Database and OECD) is performed on a panel, which contains 17 unitary countries. Explanatory variables are not examined in individual regressions, but study newly uses Generalized Method of Moments. For a model specification, Dynamic Panel Data Model Wizard is applied. Results of dynamic panel analysis suggest positive and statistically significant impact of expenditure decentralisation and stronger but negative effect of revenue decentralisation on economic development. Effect of tax decentralisation seems to be negative but statistically insignificant. These findings are enormously interesting as the relationship between the different decentralisation measures and economic performance evolves in opposite directions and countries tend to increase revenue fiscal decentralisation over the last years.