Tax mimicking in local business taxation: quasi-experimental evidence from 
Portugal

Lopes da Fonseca, Mariana

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Tax mimicking in local business taxation: quasi-experimental evidence from Portugal

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Lopes da Fonseca, Mariana
Public Economics, MPI for Tax Law and Public Finance, Max Planck Society;

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https://ssrn.com/abstract=3043068
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Citation

Lopes da Fonseca, M. (2017). Tax mimicking in local business taxation: quasi-experimental evidence from Portugal. CESifo Working Paper, No. 6647.

Cite as: https://hdl.handle.net/21.11116/0000-0000-2521-1

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.