Sub-national Tax Autonomy and Deficits: Empirical Results for 27 OECD Countries

2016-08-19T09:44:50Z (GMT) by Paul Van Rompuy
<p>Van Rompuy P. Sub-national tax autonomy and deficits: empirical results for 27 OECD countries, <i>Regional Studies.</i> This paper explores the impact of the revenue mix on the budgetary performances of regions and local governments in 27 Organisation for Economic Co-operation and Development (OECD) countries from 1995 to 2010. The main data are obtained from the OECD fiscal decentralization database that distinguishes tax income according to the degree of sub-national control over own resources. The empirical results point to a positive impact of autonomous tax income on sub-national fiscal balances in contrast to tax sharing agreements. However, the positive budgetary influence of tax autonomy only prevails from a minimum share of autonomous taxes in sub-national own revenue.</p>