Determinants tax innovation : the case of environmental taxes in Flemish muncipalities.

Abstract

The setting of new taxes is a notably visible act that has potential political costs. This paper explores the setting of new environmental taxes across the 308 Flemish municipalities over the period 1991–1999. We find that first adoptions of a green tax are much less likely to occur during election years but are more likely if ones' peers/neighbours (defined both geographically and ideologically) already have the tax. In addition, whilst left-wing governments are more likely to set new taxes and coalitions are more likely to set the tax than single-party governments, the greater the fragmentation of the municipal government, the lower is the likelihood that a new tax will be set.