The growth and variability of regional taxes: an application to Italy
The growth and variability of regional taxes: an application to Italy. Regional Studies. This paper investigates the potential
long-term growth and short-term cyclical stability of the Italian regional tax system. Short- and long-run elasticities with
respect to regional gross domestic product (GDP) are estimated between 2001 and 2012 for the surtax on central
personal income tax (RPIT) and for the regional tax on productive activities (RTPA). Cyclical reactions are more marked
for the RTPA and higher in the southern regions. Significant long-run growth of the RPIT and RTPA, on the other hand,
is found only in the northern regions. The results suggest that the behaviour of regional taxes may increase the Italian
north–south gap and cast some doubt on these taxes in financing essential public services, such as health, in each region.