The impact of fiscal competitiveness on Portuguese municipalities: An analysis based on the municipal dimension

Rita Almeida Silva

Abstract


Purpose: The aim of this study is to understand the relationship between the value of rates and the size of Portuguese municipalities, with the legal requirements of the General Regime for Local Authority Rates playing a moderating role in the relationships under study.

Methodology: A qualitative study was carried out, using methodological triangulation by combining different methods, namely national statistical data and the theoretical perspectives of different authors.

Results: By having the freedom to set lower rates municipalities seek to make themselves more attractive to investment, although municipalities with lower fiscal capacity tend to have lower rates, since the political cost of having high rates does not correspond to the marginal financial benefit associated with them.

Research limitations: We have only analysed the fees, fines and other penalties charged, taking into account the information available. The unavailability of more detailed data on all fees, tariffs and prices means that we cannot draw any conclusions about the standardisation of information in the different tax instruments.

Practical implications: This study contributes to the reflection on political weight as a reason for the territorial distribution of local taxes and fees, highlighting that municipalities with less fiscal capacity tend to have lower rates, since the political cost of having high rates does not correspond to the marginal financial benefit associated with them.

Originality: Financial autonomy and the strategic use of local taxes remain key success factors. Strengthening local financial capacity, combined with the implementation of effective fiscal policies, could contribute to a more balanced regional development. 

Keywords: Municipal Revenues, Local Government Authority, Fiscal Autonomy

DOI: https://doi.org/10.58869/EJABM11(1)/04


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European Journal of Applied Business and Management

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