Property taxation as incentive for cost control: Empirical evidence for utility services in Norway

Abstract

Recent theoretical research suggests that property taxation has incentive effects

Property tax and fiscal discipline in OECD countries

“…Our findings are consistent with the hypothesis that property taxes are less distortive and that, being visible and transparent, are likely to stimulate voters to be aware about the costs of public programs and politicians to be fiscally more disciplined (Oates, 2001). They are also consistent with previous studies highlighting the incentive effects of property taxes in controlling costs of the public sector (e.g., Glaeser, 1996;Borge and Rattso, 2008;Fiva and Ronning, 2008). Such beneficial effect of property taxation on fiscal outcomes finds correspondence in the empirical literature on fiscal decentralization in OECD countries, according to which not all taxes are the same for restrain public spending at the sub-national level, and only property taxes seem to favor smaller local governments (Liberati and Sacchi, 2013).…”

Understanding inappropriateness in health spending: The role of regional policies and institutions in caesarean deliveries

“…From this perspective, our result adds to recent empirical literature investigating how tax decentralization and VFI affect local government size using a different indicators of inefficient spending (e.g. Jin and Zou, 2002;Borge and Rattsø, 2008;Eyraud and Lusinyan, 2011;Boetti et al, 2012;Liberati and Sacchi, 2013). Second, regional differences in the share of decentralized funding mostly reflect tax base distribution across the country (e.g., De Matteis and Messina, 2010), and might then capture North-South inequalities in per capita GDP, which impact indirectly on the use of caesarean sections via patients' preferences, beyond our control for mothers' education.…”

Decentralization and Local Governments' Performance: How Does Fiscal Autonomy Affect Spending Efficiency?

“…Fiva and Rønning (2008) suggest that -conditional on resource use -the local property tax increase school quality, measured by students' achievements in national standardised tests. Borge and Rattsø (2008) find that local governments with property tax have 20% lower sewage costs than local governments without property tax. These estimated impacts are surprising given the Norwegian institutional setting, where 90% of local governments' revenues are from Central government grants and regulated income taxes, while the remaining 10% comes from user charges and property taxes.…”

“…Is fiscal decentralization really effective in reaching this end? The available empirical literature considered mostly the impact of fiscal decentralization on the size of spending, basically assuming that a large spending is inefficient (e.g., Fiva, 2006;Borge and Rattsø, 2008). Very few papers attempted at identifying efficient spending, by exploiting the literature on production and cost frontiers estimation (Coelli et al, 2005), thus, separating productive inefficiencies from total spending.…”