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Public Choice

, Volume 132, Issue 3–4, pp 457–470 | Cite as

Local choice of property taxation: evidence from Norway

  • Jon H. Fiva
  • Jørn Rattsø
Article

Abstract

Fiscal competition may influence the design of tax systems. The tax competition literature has concentrated on mobility of tax base and tax levels, while we turn the attention to the political decision-making system and the determination of tax structure. In the Norwegian setting local governments make a discrete choice whether to have property tax. The local choice is investigated in an econometric model allowing for yardstick competition. Our results indicate that yardstick competition explains the distinct geographic pattern in local property taxation observed. Grants have no effect on the propensity to have property taxation, consistent with the flypaper effect. The main methodological challenge handled concerns spatial interaction with discrete choice.

Keywords

Property taxation Yardstick competition Bayesian spatial probit 

JEL

C11 C25 D78 H71 

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Statistics NorwayResearch DepartmentOsloNorway
  2. 2.Department of Economics and Center for Economic ResearchNorwegian University of Science and TechnologyTrondheimNorway

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