The Impact of Intergovernmental Transfer on the Efficiency of Local Taxation: An Application on the Eastern Black Sea Regional Municipalities

Abstract

Intergovernmental revenue transfers are made in almost every country. While the said transfers are made by the federal administrations to federe administrations in federal countries, in the case of the unitary states, they are from central government to local governments. There are theoretical and empirical arguments in the literature that these incomes, which have been obtained without effort for local units, adversely affect their efforts to collect and increase their own self-sustaining revenues. This study, in the debate on Turkey's Eastern Black Sea Region axis, includes an empirical study conducted on municipalities. According to the econometric analysis done in the study, income transfers to municipalities from the central government negatively affect the efforts of municipalities to obtain and increase their own incomes.