Options for Strengthening Local Tax Autonomy in Austria

A central issue in the current debate about improving the efficiency of the Austrian federal system is related to a reform of the system of local taxes. The main question in this respect is related to the degree of tax autonomy of municipalities in Austria. The study discusses the pros and cons of strengthening local tax autonomy from the perspective of economic theory as well as political economy. An overview on developments of local tax autonomy in Austria, and of international experience with municipal tax autonomy in selected countries is given. Based on a checklist of criteria for a good local tax system seven options for strengthening local tax autonomy in Austria are evaluated.