Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Review of Economic Perspectives

Národohospodárský obzor; The Journal of Masaryk University

4 Issues per year

CiteScore 2016: 0.50

SCImago Journal Rank (SJR) 2016: 0.262
Source Normalized Impact per Paper (SNIP) 2016: 0.516

Open Access
See all formats and pricing
More options …
Volume 13, Issue 2


Yardstick Competition in case of the Czech Property Tax

Lucie Sedmihradská
  • Corresponding author
  • Department of Public Finance, University of Economics, Prague, nám. W. Churcilla 4, 130 67, Praha 3
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2013-07-09 | DOI: https://doi.org/10.2478/revecp-2013-0002


Introduction of the local coefficient in the property tax law since 2009 gave a significant tax authority to Czech municipalities; on average they can up to quadruple their property tax revenue which means increasing their total revenue by more than 10%. Czech municipalities appeared very cautious when exercising this new autonomy and only less than 8% of them applied the local coefficient in 2013.

The theory of yardstick competition offers one of the possible explanations of this reluctance: Voters do not vote for politicians who increase taxes unless the politicians in the neighbouring jurisdictions increase taxes as well. So municipal politicians are carefully observing what others do and approve the local coefficient with prudence.

The purpose of this paper is to evaluate the usage of the local coefficient with special regard to spatial distribution and impacts on re-election and to verify the existence of the yardstick competition among Czech municipalities in case of the property tax.

The results of the difference of means test using data for 206 municipalities with extended scope comply with this theory: (1) politicians who applied local coefficient in 2010 got re-elected in a significantly lesser number of municipalities than those who did not, and (2) in all years analyzed, municipalities applying local coefficient are surrounded by a higher share of municipalities with local coefficient than municipalities without it.

Keywords : tax autonomy; property tax; yardstick competition

  • ALLERS, M. A., ELHORST, J. P. (2005). Tax Mimicking and Yardstick Competition among Local Governments in the Netherlands. International Tax & PublicFinance. 12 (4). pp 493-513. DOI: 10.1007/s10797-005-1500-x.CrossrefGoogle Scholar

  • BESLEY, T., CASE, A. (1995) Incumbent behaviour: Vote-seeking, tax-setting, and yardstick competition. American Economic Review. 85(1). pp. 25-45.Google Scholar

  • BIRD, R. M. 1993. Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization. National Tax Journal. 46(2). pp. 207-227.Google Scholar

  • BIRD, R., FREUND, C., WALLICH, C. (1994). Decentralization of intergovernmental finance in transition economies. Comparative economic studies. 36 (4). pp. 149- 160.Google Scholar

  • BLÖCHLIGER, H., CAMPOS, J. (2011). Tax Competition Between Sub-Central Governments. OECD Economics Department Working Papers. No 872.Google Scholar

  • BLÖCHLIGER, H., KING, D. (2006). Less Than You Thought: The Fiscal Autonomy of Sub-central Governments. OECD Economic Studies. 43. pp. 155-188.Google Scholar

  • BLÖCHLIGER, H., RABESONA, J. (2009). The Fiscal Autonomy of Sub-Central Governments: An Update. OECD Working Papers on Fiscal Federalism. No 9.Google Scholar

  • BORDIGNON, M., CERNIGLIA, F., REVELLI, F. (2003) In Search of Yardstick Competition: A Spatial Analysis of Italian Municipality Property Tax Setting. Journalof Urban Economics. 54(2). pp. 199-217. DOI: 10.1016/S0094-1190(03)00062-7.CrossrefGoogle Scholar

  • CZECH STATISTICAL OFFICE. (2012). Výsledky voleb. Retrieved December 20, 2012 from http://volby.cz/Google Scholar

  • CZECH TAX ADMINISTRATION. (2012). Celostátní přehled koeficientů k dani znemovitostí. Retrieved December 20, 2012 from http://cds.mfcr.cz/cps/rde/xchg/cds/xsl/legislativa_metodika_14835.html?year=0Google Scholar

  • DELGADO, F. J., MAYOR, M.. (2011) Tax Mimicking among Local Governments: Some Evidence from Spanish Municipalities. Portuguese Economic Journal. 10(2). pp. 149-164. DOI: 10.1007/s10258-010-0067-3.Web of ScienceCrossrefGoogle Scholar

  • ERETOVÁ, V. (2012). Využití map pro zobrazení koeficientu daně z nemovitostí. Master thesis. Prague: University of Economics Prague.Google Scholar

  • FIVA, J. H., RATTSO, J. (2007). Local Choice of Property Taxation: Evidence from Norway. Public Choice. 132(3-4). pp. 457-470. DOI: 10.1007/s11127-007-9171-z.CrossrefGoogle Scholar

  • HÁJEK, V. (2007). Koeficient velikosti obcí u daně z nemovitostí a jeho uplatnění v místní daňové politice. Bachelor thesis. Prague: University of Economics Prague.Google Scholar

  • JOUMARD, I., KONGSRUD, P. (2003). Fiscal Relations across Government Levels. OECD Economic Studies. 36. pp. 155-229.Google Scholar

  • KING, D. (2006). Allocation of Taxing Powers. OECD Journal On Budgeting. 6(3). pp. 123-155.Google Scholar

  • LYYTIKÄINEN, T. (2011). Tax Competition Among Local Governments: Evidence from a Property Tax Reform in Finland. Document de treball de l’IEB 2011/35. Barcelona: Institute of Economics.Web of ScienceGoogle Scholar

  • MICHALCOVÁ, G. (2012) Fiskální externality. Master thesis. Prague: University of Economics Prague.Google Scholar

  • MINISTRY OF FINANCE. (2010). Daňová statistika. Retrieved December 20, 2012 from http://www.mfcr.cz/cps/rde/xbcr/mfcr/Danova_statistika_2005-2009_pdf.pdfGoogle Scholar

  • OATES, W.E. (1991). Fiskální federalismus: přehled teoretického výzkumu a praktických výsledků. Finance a úvěr. 41(6). pp. 261-277.Google Scholar

  • PETERS, B.G. (2009) The two futures of governing: The Two Futures of Governing: Decentering and Recentering Processes in Governing. The NISPAcee Journal of PublicAdministration and Policy. 2(1). pp. 7-24. DOI: 10.2478/v10110-009-0002-0.CrossrefGoogle Scholar

  • PRIBULOVÁ, L. (2012) Daň z nemovitostí v ČR. Master thesis. Prague: University of Economics Prague.Google Scholar

  • PROVAZNIKOVÁ, R. (2007) Financování měst, obcí a regionů: teorie a praxe. Praha: Grada PublishingGoogle Scholar

  • SEDMIHRADSKÁ, L. (2010) Daň z nemovitosí a finanční stabilita obcí v případě recese. In: KUBÁTOVÁ, K. Úloha veřejných financí v řešení problémů a dopadů současné krize. Praha: Wolters Kluwer. pp. 80-87.Google Scholar

  • SEDMIHRADSKÁ, L., BRYSON, P. (2010). Property Tax in the Czech Republic. In: SEDMIHRADSKÁ, L. Property Tax in Economies in Transition: Selected Case Studies. Bratislava: NISPAcee. pp. 70-94.Google Scholar

  • SILVA COSTA, J., CARVALHO, A.,COIMBRA, M.L. (2011). Is There Yardstick Competition among Portuguese Municipalities?Urban Public Economics Review. 15. pp. 32-61.Google Scholar

  • VERMEIR, J., HEYNDELS, B. (2006). Tax policy and yardstick voting in Flemish municipal elections. Applied Economics. 38(19). pp. 2285-2298. DOI:10.1080/00036840500427536CrossrefGoogle Scholar

About the article

The paper was elaborated as one of the outputs of the research project of the Faculty of Finance and Accounting, University of Economics, Prague, which is realized in the framework of the institutional support VŠE IP100040. I am grateful to Veronika Eretová for preparation of the maps, Michal Votoček for compilation of the list of the neighboring municipalities, and Richard Nagrand for preparing the election data.

Published Online: 2013-07-09

Published in Print: 2013-06-01

Citation Information: Review of Economic Perspectives, Volume 13, Issue 2, Pages 77–91, ISSN (Online) 1804-1663, ISSN (Print) 1213-2446, DOI: https://doi.org/10.2478/revecp-2013-0002.

Export Citation

This content is open access.

Comments (0)

Please log in or register to comment.
Log in