New Publication in Journal of Economic Policy Reform

Intense tax competition between municipalities reduces their potential to generate tax revenues. Inter-municipal cooperation in general and joint business parks in particular offer a platform for coordinating local tax rates with neighbouring municipalities in order to reduce tax competition. Christian Bergholz (Thuenen Institute), Ivo Bischoff and Simon Melch (University of Kassel) as well as Peter Haug (IWH) investigate whether local politicians and citizens are aware of this logic and whether they take it into account. Based on survey data from rural Hessian municipalities, the authors find that citizens' support for joint business parks increases with the intensity of tax competition, but not in other areas of inter-municipal cooperation. Among local politicians, we find no influence of tax competition on support for inter-municipal cooperation. According to the results, the extent to which local politicians support inter-municipal cooperation does not depend on the intensity of tax competition.

The article can be downloaded here: https://doi.org/10.1080/17487870.2024.2333306

Contact: Dr. Christian Bergholz

Project: Financial resources and room for manoeuvre of rural municipalities