Spatial interactions in property tax policies among Italian municipalities

This paper aims to estimate, through the use of a spatial model, the determinants of fiscal policies on property tax adopted by Italian municipalities in 2014, to assess the existence of strategic interactions influencing their revenue decisions and, finally, to investigate the possible sources of such tax mimicking. The analysis evaluates the impact of political and socio‐economic variables on the local policy decisions and confirms that the choices on property tax are influenced by the neighbouring municipalities’ behaviour. With regard to the tax mimicking sources, results highlight that the imitative behaviour among municipalities on their tax policy is determined mainly from spillover effects, with a decreasing effect in relation to municipal size.