Impact of Local Government Revenue Structure on Income Growth and Employment in Croatia

Abstract

The paper researches effects of local government revenue structure on income growth and employment in Croatia. The results confirm highly positive and significant effects of personal income taxation. This differs dramatically from the previous research based on central government level, which show that property and consumptions taxes are growth-friendly. The most probable explanation of such results could be in narrow revenue structure defined by the vertical fiscal equalisation and the fact that particular local revenue structure does not affect competitiveness in the same way as overall revenue structure of the country.