Municipal Tax Autonomy and Tax Mimicking in Czech Municipalities

  • Lucie Sedmihradská University of Economics Department of Public Finance nám. W. Churchilla 4 130 67 Praha 3 Czech Republic
  • Eduard Bakoš Masaryk university Faculty of Economics and Administration Lipová 41a 602 00 Brno Czech Republic
Keywords: property tax, tax mimicking, local government

Abstract

Property tax autonomy of the Czech municipalities is quite narrow and to great extent unused. Perceived political costs of its usage are high and only 8% of municipalities utilized the possibility to increase the tax rates through so called local coefficient. Using the binary logit model and a full sample and two subsamples of Czech municipalities in 2014 the existence of tax mimicking is confirmed regardless the subsample of municipalities considered or the definition of neighbors applied. The likelihood to increase the local coefficient is to some extent influenced by the composition of the municipal council and local demographic, geographic and fiscal situation. However, the overall capacity of the model to indicate municipalities which apply local coefficient is low and suggests that there are many other or different situations or factors which result in application of local coefficient.

Author Biographies

Lucie Sedmihradská, University of Economics Department of Public Finance nám. W. Churchilla 4 130 67 Praha 3 Czech Republic
Lucie Sedmihradska is assistant professor at the Department of Public Finance, University of Economics in Prague. Apart from her teaching she has been involved in several local and international research projects focusing on public budgets, local government finance and inter-municipal cooperation. She has published approximately a dozen journal articles and book chapters.
Eduard Bakoš, Masaryk university Faculty of Economics and Administration Lipová 41a 602 00 Brno Czech Republic
Eduard Bakoš is assistant professor at the Department of Public Administration at the Faculty of Economics and Administration (Masaryk University). Formerly he worked at the University of Defence, where he lectured safety issues and crisis management from the perspective of public administration. Pedagogically he focuses on public finance, environmental economics and public administration issues. In long term he cooperates with major institutions in public administration sector, at a national level, regional and local as well. He participated in finding several solutions of applied projects for public administration, especially regarding its impact on the environment.

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Published
2015-09-07
Section
Articles