Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170632
Authors: 
Bordignon, Massimo
Grembi, Veronica
Piazza, Santino
Year of Publication: 
2015
Series/Report no.: 
Working Paper, Dipartimento di Economia e Finanza (DISCE), Università Cattolica del Sacro Cuore 35
Abstract: 
In a political agency model, we study the effect of introducing a less transparent tax tool for the financing of local governments. We show that lower quality politicians would use more the less transparent tax tool to enhance their probability of re-election. This prediction is tested by studying a reform that in 1999 allowed Italian municipalities to partially substitute a more accountable source of tax revenue (the property tax) with a less transparent one (a surcharge on the personal income tax of residents). Using a Difference in Difference approach, we show that in line with theory, Mayors at their first term in power adopted a higher surcharge on the personal income tax and reduced the property tax rate significantly more than Mayors in their final term..
Subjects: 
Fiscal federalism
Tax transparency
Agency Model
Property tax
JEL: 
H71
H77
D78
Document Type: 
Working Paper

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