Municipal fees and tax rates place a burden on the businesses in a region. The level of these may therefore play a decisive role in the relocation decisions of companies. The aim of the project is to determine the level of the different taxes and fees in the municipalities in the Leipzig chamber district of the IHK and to quantify the burden of these costs for businesses. Regional differences are demonstrated by comparing in the fees and taxes of municipalities within and outside of the chamber district. Building on these observations, policy recommendations from improving the location quality of the cities in the chamber district are drawn. Using these conclusions the location quality of the municipalities in the chamber district can be positively influenced by targeted measures.
To infer the regional differences in the fee and tax burdens, it is first necessary to document the different municipal fees and tax rates in detail. This analysis is the starting point for computing the local differences. In particular, the fee and local tax payments of companies in the manufacturing industry, the retail industry, office based service provision and gastronomy are considered. In addition to the analysis of burdens for businesses, the determinants of the variation are indentified to systematically explain these observed differences. Finally policy conclusions are drawn to positively influence the location characteristics of the municipalities in the chamber district, in both an intra and interregional comparison.
Tax and fee codes of the municipalities Statistics Offices of the States Federal Statistical Office
Even within a relatively small region such as the Leipzig chamber district of the IHK, large differences in the level of municipal fees and tax rates are observed. The broader the region of interest is defined the larger the variation becomes. Significant differences can in turn prevent local economic growth if businesses see the high level of tax rates and fees as a negative location factor. The analysis shows that some of the differences can be attributed to local characteristic (such as population density, deficits in public budgets, and attractiveness of the location etc.) however the differences in some fees cannot be explained systematically. The results of this causality analysis form the basis for the policy conclusions to improve the location quality of the municipalities in the Leipzig chamber district of the IHK. The chamber district in Leipzig is a strong regional differentiated area and shows substantial differences in local taxes in comparison with intraregional areas. As anticipated, the differences increase the further area under investigation is extended. These differences can burden the regional economy, due to the companies’ final decision on establishment. The analysis shows that the differences in taxes are correlated to local conditions. The results provide the basis for further political assessments to improve local attractiveness in the area of the chamber district in Leipzig.
Montén, Anna, Joachim Ragnitz and Christian Thater: Öffentliche Abgaben als Belastungsfaktoren der Unternehmen – dargestellt am Beispiel der Region Leipzig, ifo Dresden Studie 56, München/Dresden 2010.
Montén, Anna and Christian Thater: Ursachenanalyse für unterschiedliche kommunale Abgabenniveaus am Beispiel des Kammerbezirkes der IHK zu Leipzig, in: ifo Dresden berichtet 04/2010, p. 31-42. (Download, PDF, 491 KB).
Montén, Anna and Christian Thater: Belastungsanalyse der Unternehmen durch kommunale Abgaben, in: ifo Dresden berichtet 05/2010, p. 11-20. (Download, PDF, 257 KB).
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