John H. Bowman

The Effect of Various Intergovernmental aid Types on Local Own-Source Revenues: The Case of Property Taxes in Minnesota Cities

Federal policy changes are promoting increased state-local revenue self-sufficiency. The local role as a service provider could be maintained through either increased own-source revenues or increased slate aid. Several state-local trends and features suggest that relatively more of the adjustment might come through state aids. General support aids would best preserve local discretion, but some argue such aids are too stimulative and cause a bloated public sector. Analyzing 174 Minnesota cities, this article explores possible implications of these federalism changes. Both local tax features—base size and ability to export local taxes—and intergovernmental aids are significant determinants of local taxes per capita. Federal aids (aggregate) and one of two state general support aids stimulate local taxes, but to differing degrees. Consistent with theoretical predictions, matching state aid is most stimulative, while modified lump-sum state aid exerts no influence on local taxes, providing possible discrimination between two views concerning the stimulative effect of a tax effort factor in a lump-sum aid distribution formula.

Local Property Taxation in South Africa: Current Performance and Challenges for the Post-Apartheid Era

As part of the many changes in post-apartheid South Africa, few large non-racial local governments replace relatively small, racially defined ones. The new constitution reserves property taxation for local governments, making it the only major tax available to localities. Property taxation is being extended into previously untaxed areas, principally those of the former black local authorities. It is expected that pressures on this tax will increase as it is called upon to finance services for the larger population Preliminary assessment-sales ratio studies for a handful of localities indicate a wide range of assessment levels. Such circumstances could undermine the acceptance and legitimacy of the tax and, perhaps, of local government. More frequent valuation might raise both assessment levels and uniformity. Systematic, widespread ratio studies and a closer look at the manner in which values are estimated are needed.