Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/171111 
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper No. 6647
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
I exploit an exogenous reform introducing a local business tax in Portugal to study tax mimicking among jurisdictions. The identification strategy relies on a quasi-experimental difference-in-differences methodology and heterogeneity in treatment intensity. Results show evidence of significant short-run tax mimicking that decreases over time. I study possible generating processes underlying the strategic interaction among municipalities and find significant evidence of electoral concerns. These electoral concerns are not met with electoral consequences at the local elections, which may be behind the diffusion of local business taxation in the long run.
Subjects: 
tax mimicking
yardstick competition
local reform
JEL: 
D72
H71
H77
Document Type: 
Working Paper
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