Local taxes and economic growth
(2026)- Abstract
- Municipalities shoulder the burden of creating business-friendly environments – managing infrastructure, navigating public resistance, and investing countless hours in smoothing the path for economic development. Yet, the rewards often flow elsewhere. Local taxes on economic activity offer a powerful solution. While a thriving local economy boosts budgets, different taxes shape municipal decision-making in distinct ways. This report examines how various type of taxes can serve as rewards for local economic development. To compare municipal tax revenues across countries, it introduces three dedicated indicators. To illustrate real-world impact, three case studies demonstrate how the sharing of direct taxes can catalyse local growth.... (More)
- Municipalities shoulder the burden of creating business-friendly environments – managing infrastructure, navigating public resistance, and investing countless hours in smoothing the path for economic development. Yet, the rewards often flow elsewhere. Local taxes on economic activity offer a powerful solution. While a thriving local economy boosts budgets, different taxes shape municipal decision-making in distinct ways. This report examines how various type of taxes can serve as rewards for local economic development. To compare municipal tax revenues across countries, it introduces three dedicated indicators. To illustrate real-world impact, three case studies demonstrate how the sharing of direct taxes can catalyse local growth. Furthermore, there are strong indications that voluntary tax compliance rises when revenues remain local. In other words, rewarding local governments through tax sharing is a potential driver of both economic growth and fiscal compliance – benefiting citizens, businesses, and governments at all levels. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/62e92c99-5dd6-4899-9e8b-79706c71071c
- author
- Preyer, Elisabeth
; Kalcheva, Desislava
; Curtale, Riccardo
; Tucci, Michele
; Kucas, Andrius
; Bel, Germa
; Damian, Alexandru Cristian
; Lukomska, Julita
; Skiltere, Sanita
; Chtioul, Matthieu
; Hesse, Mario
; Starke, Tim
; Loiacono, Luisa
; Secomandi, Riccardo
; Gastaldi, Francesca
; Ferreira, Joana
; Sirvydis, Victoras
; Kalman, Judit
; Käärmann-Liive, Kaimi
; Runtic, Dario
; Petrovici, Norbert
; Houlberg, Kurt
; Garcia, Ana Agundez
; Ramberg, Ulf
LU
; Turley, Gerard
; Herrmann, Benedikt
; Von Ehrlich, Maximilian
and Sedmihradska, Lucie
(Less) - organization
- publishing date
- 2026-05-04
- type
- Book/Report
- publication status
- published
- subject
- pages
- 91 pages
- publisher
- Joint Research Center (JRC), European Commission
- report number
- JRC145286
- ISBN
- 978-92-68-37451-1
- DOI
- 10.2760/1826247
- language
- English
- LU publication?
- yes
- id
- 62e92c99-5dd6-4899-9e8b-79706c71071c
- alternative location
- https://publications.jrc.ec.europa.eu/repository/handle/JRC145286
- date added to LUP
- 2026-05-05 13:33:01
- date last changed
- 2026-05-07 03:00:09
@techreport{62e92c99-5dd6-4899-9e8b-79706c71071c,
abstract = {{Municipalities shoulder the burden of creating business-friendly environments – managing infrastructure, navigating public resistance, and investing countless hours in smoothing the path for economic development. Yet, the rewards often flow elsewhere. Local taxes on economic activity offer a powerful solution. While a thriving local economy boosts budgets, different taxes shape municipal decision-making in distinct ways. This report examines how various type of taxes can serve as rewards for local economic development. To compare municipal tax revenues across countries, it introduces three dedicated indicators. To illustrate real-world impact, three case studies demonstrate how the sharing of direct taxes can catalyse local growth. Furthermore, there are strong indications that voluntary tax compliance rises when revenues remain local. In other words, rewarding local governments through tax sharing is a potential driver of both economic growth and fiscal compliance – benefiting citizens, businesses, and governments at all levels.}},
author = {{Preyer, Elisabeth and Kalcheva, Desislava and Curtale, Riccardo and Tucci, Michele and Kucas, Andrius and Bel, Germa and Damian, Alexandru Cristian and Lukomska, Julita and Skiltere, Sanita and Chtioul, Matthieu and Hesse, Mario and Starke, Tim and Loiacono, Luisa and Secomandi, Riccardo and Gastaldi, Francesca and Ferreira, Joana and Sirvydis, Victoras and Kalman, Judit and Käärmann-Liive, Kaimi and Runtic, Dario and Petrovici, Norbert and Houlberg, Kurt and Garcia, Ana Agundez and Ramberg, Ulf and Turley, Gerard and Herrmann, Benedikt and Von Ehrlich, Maximilian and Sedmihradska, Lucie}},
institution = {{Joint Research Center (JRC), European Commission}},
isbn = {{978-92-68-37451-1}},
language = {{eng}},
month = {{05}},
number = {{JRC145286}},
title = {{Local taxes and economic growth}},
url = {{http://dx.doi.org/10.2760/1826247}},
doi = {{10.2760/1826247}},
year = {{2026}},
}