ABSTRACT
This chapter focuses on the theoretical characteristics of local tax policy. Attention is given to its scope, types, and objectives. The first part discusses municipal tax policy’s universal objectives, which include fiscal objectives related to the municipality’s signalled demand for money and the provision of local tax revenues and non-fiscal objectives related to the impact and stimulation of economic and social development processes by municipal bodies. Then, the most common models of local tax policy – liberal, stimulating, populist, and fiscal – were discussed. In the next part of the chapter mainly, much space was devoted to introducing theoretical concepts (tax competition, the concept of the average voter, the political electoral cycle and party model, and political budget cycles) and presenting the most critical conclusions resulting from studies of local tax policy conducted in many countries.
