Fiscal attractiveness of Portuguese municipalities

  • Received May 12, 2023;
    Accepted June 15, 2023;
    Published July 19, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/pmf.12(2).2023.01
  • Article Info
    Volume 12 2023, Issue #2, pp. 1-16
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The modeling of the municipalities’ tax burden is one of the most relevant issues, especially in terms of municipal competitiveness. It challenges the definition and delimitation of local authorities’ taxing powers. This study aims to analyze the level of taxation of Portuguese municipalities and how local policies contribute to the definition of a ranking of fiscally more competitive municipalities. The paper applies quantitative methods based on the fiscal information made available by municipalities. It has been determined that it is possible to classify municipalities as more or less competitive through their tax supply, mainly at the level of their ability to set tax rates. In 2021, compared to 2020, the most fiscally competitive municipalities were located in the Autonomous Region of the Azores (Corvo (95.128%); Vila do Pico (95.128%); Madalena (95.128%); Povoação (95.078%); Santa Cruz das Flores (95.072%); Angra do Heroísmo (95.044%); Nordeste (95.036%); Vila Franca do Campo (95.036%); Horta (95.017%); and Ponta Delgada (95.017%)). The study also verified the maintenance of fiscal competitiveness among the most fiscally attractive municipalities, despite having several types of fiscal attraction policy options at their disposal, always conditioned by national legislation. This means fiscal policy is an instrument of competition for attracting companies, people, and productive investment to local municipalities. The existence of an international dogma favorable to the increasing attribution of administrative and financial autonomy to local authorities mainly supports this phenomenon.

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    • Figure 1. The 10 more (green) and less (red) fiscally attractive municipalities, 2017–2021
    • Figure 2. The more (green) and less (red) fiscally attractive municipalities by districts, 2020–2021
    • Figure 3. The more (green) and less (red) fiscally attractive municipalities by districts, 2018–2019
    • Figure 4. The more (green) and less (red) fiscally attractive municipalities by districts, 2017
    • Figure 5. Gaussian distribution curves of the levels of fiscal attractiveness (2017 to 2021)
    • Table 1. The 10 more and less fiscally attractive municipalities (2021–2017)
    • Table 2. Results by districts and autonomous regions (2017–2021)
    • Formal Analysis
      Ricardo de Moraes e Soares, Pedro Pinheiro
    • Investigation
      Ricardo de Moraes e Soares
    • Methodology
      Ricardo de Moraes e Soares
    • Project administration
      Ricardo de Moraes e Soares
    • Resources
      Ricardo de Moraes e Soares, Pedro Pinheiro
    • Software
      Ricardo de Moraes e Soares
    • Supervision
      Ricardo de Moraes e Soares
    • Visualization
      Ricardo de Moraes e Soares, Pedro Pinheiro
    • Writing – original draft
      Ricardo de Moraes e Soares
    • Writing – review & editing
      Ricardo de Moraes e Soares, Pedro Pinheiro