Spatial interdependence in property taxation: the case of Polish municipalities
DOI:
https://doi.org/10.24136/eq.2018.014Keywords:
tax competition, property taxation, tax mimicking, spatial interdependence, PolandAbstract
Research background: Real estate and urban economics literature are abundant in studies discussing various types of property taxes and their characteristics. A growing area of re-search has been focused on tax equity, tax competition, and yardstick competition, where the latter two reflect the idea of tax mimicking. Recently, due to substantial developments in spatial and regional economics, more attention has been drawn to spatial effects. Empirical results are focused on spatial interaction and diffusion effects, hierarchies of place and spatial spillovers. Property tax system in Poland differs from those utilized in the majority of developed countries. As a consequence, property tax policy at the local government level (including tax competition and tax mimicking effects) in Poland can differ substantially from those found in previous research in the US and other European countries. There are few studies addressing the problem of tax competition and tax mimicking in Poland from an empirical perspective.
Purpose of the article: In the article, we explore spatial interdependence in property taxation. We identify clustering or dispersion of high and low values of the tax rates within major metropolitan areas in Poland. The effects can indicate the presence of tax mimicking among municipalities in given metropolitan areas.
Methods: We analyze the data from 304 municipalities in 10 metropolitan areas in Poland from the year 2007 to 2016. The data covers four property tax rates: (1) on residential buildings (2) on buildings used for business purpose (3) on land used for business purpose (4) on land for other uses. To explore the spatial distribution of rates, we used global and local spatial autocorrelation indicators (Moran?s I statistic and LISA).
Findings & Value added: The results suggest the presence of spatial correlation within metropolitan areas. We also found significant differences between metropolitan areas. The results of the study fill the gap in empirical research concerning property tax interdependencies and tax mimicking in Poland.
Downloads
References
Allers, M. A., & Elhorst J. P. (2005). Tax mimicking and yardstick competition among local governments in the Netherlands. International Tax and Public Finance, 12. doi: 10.1007/s10797-005-1500-x.
DOI: https://doi.org/10.1007/s10797-005-1500-x
View in Google Scholar
Anselin, L., Syabri, I., & Kho, Y. (2006). GeoDa: an introduction to spatial data analysis. Geoegraphical Analysis, 38. doi: 10.1111/j.0016-7363.2005.00671.x.
DOI: https://doi.org/10.1111/j.0016-7363.2005.00671.x
View in Google Scholar
Balcerzak, A. P. (2016). Fiscal burden in the European Union member states. Economic Annals-XXI, 161(9-10). doi: 10.21003/ea.V161-01.
DOI: https://doi.org/10.21003/ea.V161-01
View in Google Scholar
Bartik, T. J. (1992). The effects of state and local taxes on economic development: a review of recent research. Economic Development Quarterly, 6. doi: 10.1177/089124249200600110.
DOI: https://doi.org/10.1177/089124249200600110
View in Google Scholar
Baybeck, B., Berry, W. D., & Siegel, D. A. (2011). A strategic theory of policy diffusion via intergovernmental competition. Journal of Politics, 73(1). doi: http: 10.1017/S0022381610000988.
DOI: https://doi.org/10.1017/S0022381610000988
View in Google Scholar
Besley, T., & Case, A. (1995). Incumbent behaviour. vote-seeking, tax-setting, and yardstick competition. American Economic Review, 85.
View in Google Scholar
Buss, T. F. (2001). The effect of state tax incentives on economic growth and firm location decisions: an overview of the literature, Economic Development Quarterly, 15(1). doi: 10.1177/089124240101500108.
DOI: https://doi.org/10.1177/089124240101500108
View in Google Scholar
Case, A. C. (1993). Interstate tax competition after TRA86. Journal of Policy Analysis and Management, 12(1). doi: 10.2307/3325468.
DOI: https://doi.org/10.2307/3325468
View in Google Scholar
Delgado, F. J., & Mayor, M. (2011). Tax mimicking among local governments: some evidence from Spanish municipalities. Portuguese Economic Journal, 10(2). doi: 10.1007/s10258-010-0067-3.
DOI: https://doi.org/10.1007/s10258-010-0067-3
View in Google Scholar
Felis, P. (2014). The impact of local governments on the effectiveness of selected own revenue sources as exemplified by communes in Poland. Finanse i Prawo Finansowe, 1(4).
View in Google Scholar
Filipiak, B. F. (2016). The effects of granting tax credit, remission and redundancies by the tax authorities of municipalities, Ubezpieczenia, 5(83).
DOI: https://doi.org/10.18276/frfu.2016.5.83/1-16
View in Google Scholar
Głuszak, M., & Marona, B. (2015). Cadastral tax. The economic determinants of of property taxation reform. Warsaw: Poltext.
View in Google Scholar
Głuszak, M. (2015). On the equity of the area-based property tax system in Poland, World of Real Estate Journal, 4(94). doi: 10.14659/worej.2015.94.06.
View in Google Scholar
Helms, L. J. (1985). The effect of state and local taxes on growth. Review of Economics and Statistics, 67.
DOI: https://doi.org/10.2307/1924801
View in Google Scholar
Heyndels, B., & Vuchelen, J. (1998). Tax mimicking among Belgian municipalities. National Tax Journal, 51(1).
DOI: https://doi.org/10.1086/NTJ41789314
View in Google Scholar
Kopczewska, K. (2013). The spatial range of local governments: does geographical distance affect governance and public service? Annals of Regional Science. 51(3). doi: 10.1007/s00168-013-0567-z.
DOI: https://doi.org/10.1007/s00168-013-0567-z
View in Google Scholar
Kopyściańska, K. (2016). Cadastral tax in the context of the constitutional principle of tax justice. Oeconomia, 50(1). doi: 10.17951/h.2016.50.1.381.
DOI: https://doi.org/10.17951/h.2016.50.1.381
View in Google Scholar
Kotlińska, J., & Nowak, M. J. (2010). Property tax in the external zones of the metropolitan areas in Western Poland. Problemy Rozwoju Miast, 7(4).
View in Google Scholar
Ladd, H. (1992). Mimicking of local tax burdens among neighboring counties. Public Finance Quarterly, 20(4). doi: 10.1177/109114219202000404.
DOI: https://doi.org/10.1177/109114219202000404
View in Google Scholar
Łukomska, J., & Swianiewicz, P. (2015). Local tax policy in Poland. Municipium. doi: 10.13140/RG.2.1.1928.0089.
View in Google Scholar
Małkowska, A., & Głuszak, M. (2016). Pro-investment local policies in the area of real estate economics – similarities and differences in the strategies used by communes. Oeconomia Copernicana, 7(2). doi: 10.12775/OeC.2016.016.
DOI: https://doi.org/10.12775/OeC.2016.016
View in Google Scholar
Małkowska, A. (2003). The role of property tax in gmina revenues: the Case of Krakow. Zeszyty Naukowe Akademia Ekonomiczna w Krakowie, 636.
View in Google Scholar
Nalepka, A., & Małkowska, A. (2013). Real property management instruments in the stimulation of the economic development of municipalities using the example of the Malopolska voivodship. Samorząd Terytorialny, 5.
View in Google Scholar
Oates, W.E. (1988). On the nature and measurement of fiscal illusion: a survey. In G. Brennan, B. S. Grewal & P. Groenewegen (Ed.). Taxation and fiscal federalism: essays in honour of Russell Mathews. Sydney: Australian National University Press.
View in Google Scholar
Oulasvirta, L., & Turala, M. (2009). Financial autonomy and consistency of central government policy towards local governments. International Review of Administrative Sciences, 75. doi: 10.1177/0020852309104178.
DOI: https://doi.org/10.1177/0020852309104178
View in Google Scholar
Santolini, R. (2008), A spatial cross-sectional analysis of political trends in Italian municipalities. Papers in Regional Science, 87. doi: 10.1111/j.1435-5957.2008.00201.x.
DOI: https://doi.org/10.1111/j.1435-5957.2008.00201.x
View in Google Scholar
Skačkauskienė, I. (2013). Peculiarities of labour income taxation in the Baltic States. Entrepreneurial Business and Economics Review, 1(4). doi: 10.15678/EBER.2013.010405.
DOI: https://doi.org/10.15678/EBER.2013.010405
View in Google Scholar
Sedmihradská, L., & Bakoš, E. (2016). Municipal tax autonomy and tax mimicking in Czech municipalities. Lex Localis, 14(1). doi: 10.4335/14.1.75-92.
DOI: https://doi.org/10.4335/14.1.75-92(2016)
View in Google Scholar
Sole-Olle, A. (2003). Electoral accountability and tax mimicking: the effects of electoral margins, coalition government, and ideology. European Journal of Political Economy, 19(4).
DOI: https://doi.org/10.1016/S0176-2680(03)00023-5
View in Google Scholar
Surówka, K. (2004). System of payment in the budgets of self-government units and changes. Zeszyty Naukowe Wyższej Szkoły Ekonomicznej w Bochni, 2.
View in Google Scholar
Szewczuk, A. (2008). Measuring financial independence of local self-government units. In L. Patrzalek (Ed.). Selected problems of local government finance, Poznan: Poznan School of Banking Press.
View in Google Scholar
Wach, K. (2005). Tax systems of European Union member states. Kraków: Oficyna Ekonomiczna.
View in Google Scholar
Walasik, A. (2014). The scope and methods of local finance competition. Studia Ekonomiczne. Finanse-problemy-decyzje, University of Economics in Katowice, 198(1).
View in Google Scholar
Wassmer, R. W. (1994). Can local incentives alter a metropolitan city's economic development? Urban Studies, 31(8). doi: 10.1080/00420989420081151.
DOI: https://doi.org/10.1080/00420989420081151
View in Google Scholar
Węgrzyn, J., & Surówka, M. (2011). Conditions and directions of municipal investments in Cracow suburban area. In A. Nalepka (Ed.). Investments and real estate – the challenges of the 21st century. Krakow: The Cracow University of Economics Foundation.
View in Google Scholar
Zawora, J. (2008). Financial independence of municipalities. Rzeszow: UR Publishing House, University of Rzeszow.
View in Google Scholar
