Local TaxCompetition in Poland?

Abstract

The concept of tax competition has been successfully applied in an analysis conducted in several European countries, but so far it has not been systematically tested either in Poland or in other countries of Central and Eastern Europe. There are two types of competition discussed in the article: classic competition for mobile tax base and ‘yardstick competition’, in which local politicians compete for political capital being related to the comparison of tax rates with neighbouring municipalities. It is expected that in Poland the ‘yardstick competition’ is more important from the classic competition for the mobile tax base.

Spatial Interactions in Local Policy Making: Applicability of Tax Competition and Tax Mimicking Concepts to Local Government Policies on Tax Rates and User Charges for Services in Poland

“…Dependent variables are rates of the local taxes, while the list of independent variables includes two which are related to potential tax competition (tax rate in neighbouring municipalities and standard deviation of tax rates in neighbouring municipalities) and three related to the broader context in which tax policies are adopted (population size, affluence of local community, and distance to the large urban agglomeration). The results of the test confirm that spatial interaction related to neighbourhood factor does matter (for more details see [11]), although the explanatory power of constructed models differs depending on the tax. The best predictions of the tax rates one gets in the case of agriculture tax (see table 1).…”

“…Although empirical study concentrates on Poland, it may have a wider importance for the whole region of Central and Eastern Europe. The concept has been recently applied in Polish local government studies to analyse tax policies [11], but now it is proposed to borrow the concept of competition to study tariffs of local services, such as charges for water provision and parking fees.…”

The Politics of Local Tax Policy-Making in Poland

“…Changing that decision is extremely diffi cult, even if local authorities are convinced that it was the wrong decision. Th is claim may be supported by the following quotations: Th e latter quotation confi rms the existence of the yardstick competition which was described in an earlier study (Swianiewicz and Łukomska 2014). In the literal sense there is no yardstick competition in the described case, but rather a collusion (or attempt at collusion) of several local governments.…”

Is There Tariff Mimicking? The Case of Water Provision in Poland

“…the situation in which governments replicate policies noticed in other governments. The concept of competition or mimicking has been applied usually to tax policies (see the review of earlier studies in [12]), but as we argue in following section of this article, in some circumstances it may be even more useful for analysis of tariffs for local public services. Tariff mimicking is defined in this article as the situation in which the local tariff in the given jurisdiction is set under the strong influence or it is changed as a reaction to the level of tariffs applied by neighbouring jurisdictions.…”

“…Although empirical study concentrates on Poland, it may have a wider importance for the whole region of Central and Eastern Europe. The concept has been recently tested in the local government studies to analyse tax policies in Poland [7], [12], and the Czech Republic [10], but now it is proposed to borrow the concept of competition to study tariffs of local services, such as charges for water provision.…”