BUSINESS TAX INTERACTIONS AMONG LOCAL GOVERNMENTS: AN EMPIRICAL ANALYSIS OF THE FRENCH CASE |
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| Authors: | Matthieu Leprince,Thierry Madiè s,Sonia Paty |
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| Affiliation: | University of Rennes 1, Faculty of Economics and CREM (UMR CNRS 6211), France. E-mail:; University of Fribourg, Faculty of Economics and Social Science, Switzerland, and University of Rennes 1, CREM (UMR CNRS 6211), France. E-mail:; University of Lille I, Faculty of Economics, EQUIPPE- MEDEE and INRA-CESAER, France. E-mail: |
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| Abstract: | ABSTRACT. We study the business tax ("taxe professionnelle") behavior of the intermediate level (department) of local government in France and test in the same model the two hypotheses that department tax rates are explained by upper tier (region) tax rates and by tax rates chosen by other departments. We first reject the hypothesis of tax interactions between departments and regions, the two upper levels of local governments. Second, we provide evidence that business tax interactions among departments are significant. Including the vertical dimension in the estimated model does not lead to a decrease in the horizontal tax interactions parameter, nor to its nonsignificance. |
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