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Effects of local fiscal policy on firm profitability

(2014) SERVICE INDUSTRIES JOURNAL. 34(16). p.1289-1306
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Organization
Abstract
For decades, scholars and policy-makers have been interested in how fiscal policy influences entrepreneurship. Until now, research has focused on fiscal policy at the federal or regional level and used macro-economic outcome measures. Considerably less attention was given to how municipal governments can influence economic outcomes at the micro level. The present study examines the effect of municipal taxes, spending and tax compliance costs on firm profitability within the Flemish hospitality industry. This is an interesting research setting, since Flemish municipalities have far-ranging fiscal autonomy which has resulted in a proliferation of local taxes, many of which are specific to the hospitality industry. The findings reveal that local taxes have a negative impact on firm profitability, while aggregate public spending has a positive influence. The tax effect is economically relevant and exceeds the public spending impact. Finally, we find no impact of compliance costs from local taxes.
Keywords
ECONOMIC-DEVELOPMENT, TAX COMPLIANCE COSTS, INFRASTRUCTURE INVESTMENT, PUBLIC INFRASTRUCTURE, FINANCIAL PERFORMANCE, OWNERSHIP STRUCTURE, LOCATION DECISIONS, EMPIRICAL-EVIDENCE, BUSINESS LOCATION, METROPOLITAN-AREA, firm profitability, municipal government, fiscal policy, entrepreneurship

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Citation

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MLA
De Schoenmaker, Sofie, Philippe Van Cauwenberge, and Heidi Vander Bauwhede. “Effects of Local Fiscal Policy on Firm Profitability.” SERVICE INDUSTRIES JOURNAL 34.16 (2014): 1289–1306. Print.
APA
De Schoenmaker, S., Van Cauwenberge, P., & Vander Bauwhede, H. (2014). Effects of local fiscal policy on firm profitability. SERVICE INDUSTRIES JOURNAL, 34(16), 1289–1306.
Chicago author-date
De Schoenmaker, Sofie, Philippe Van Cauwenberge, and Heidi Vander Bauwhede. 2014. “Effects of Local Fiscal Policy on Firm Profitability.” Service Industries Journal 34 (16): 1289–1306.
Chicago author-date (all authors)
De Schoenmaker, Sofie, Philippe Van Cauwenberge, and Heidi Vander Bauwhede. 2014. “Effects of Local Fiscal Policy on Firm Profitability.” Service Industries Journal 34 (16): 1289–1306.
Vancouver
1.
De Schoenmaker S, Van Cauwenberge P, Vander Bauwhede H. Effects of local fiscal policy on firm profitability. SERVICE INDUSTRIES JOURNAL. 2014;34(16):1289–306.
IEEE
[1]
S. De Schoenmaker, P. Van Cauwenberge, and H. Vander Bauwhede, “Effects of local fiscal policy on firm profitability,” SERVICE INDUSTRIES JOURNAL, vol. 34, no. 16, pp. 1289–1306, 2014.
@article{4352972,
  abstract     = {For decades, scholars and policy-makers have been interested in how fiscal policy influences entrepreneurship. Until now, research has focused on fiscal policy at the federal or regional level and used macro-economic outcome measures. Considerably less attention was given to how municipal governments can influence economic outcomes at the micro level. The present study examines the effect of municipal taxes, spending and tax compliance costs on firm profitability within the Flemish hospitality industry. This is an interesting research setting, since Flemish municipalities have far-ranging fiscal autonomy which has resulted in a proliferation of local taxes, many of which are specific to the hospitality industry. The findings reveal that local taxes have a negative impact on firm profitability, while aggregate public spending has a positive influence. The tax effect is economically relevant and exceeds the public spending impact. Finally, we find no impact of compliance costs from local taxes.},
  author       = {De Schoenmaker, Sofie and Van Cauwenberge, Philippe and Vander Bauwhede, Heidi},
  issn         = {0264-2069},
  journal      = {SERVICE INDUSTRIES JOURNAL},
  keywords     = {ECONOMIC-DEVELOPMENT,TAX COMPLIANCE COSTS,INFRASTRUCTURE INVESTMENT,PUBLIC INFRASTRUCTURE,FINANCIAL PERFORMANCE,OWNERSHIP STRUCTURE,LOCATION DECISIONS,EMPIRICAL-EVIDENCE,BUSINESS LOCATION,METROPOLITAN-AREA,firm profitability,municipal government,fiscal policy,entrepreneurship},
  language     = {eng},
  number       = {16},
  pages        = {1289--1306},
  title        = {Effects of local fiscal policy on firm profitability},
  url          = {http://dx.doi.org/10.1080/02642069.2014.942654},
  volume       = {34},
  year         = {2014},
}

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