Territorial taxation and regional development: what interaction?

Abstract

Local government taxation is not only a financial resource intended to cover the costs of local public services, but also an economic policy instrument that contributes to the consolidation of the decentralization process, a cornerstone in the building of a democratic and modern state.

The aim of this paper is to highlight the role of territorial taxation and its impact on the improvement of living conditions as measured by the Human Development Index (HDI).

Our research question is as follows: What effect does local taxation have on regional development?

In order to understand our study, we collected data from various sources and analyzed them using multiple linear regression modeling.

The results show a positive impact of the evolution of tax revenues on the regional HDI.

It follows that despite the efforts and progress made by some local authorities, others are lagging behind in development due to the weakness of local fiscal potential and territorial inequalities in human capital development.

Jel classification : H2, O18

Paper type: Theoretical research