74

The aim of this paper is to perform an econometric test for the presence of spatial tax interactions among départements in mainland France. To this end, we produced a spatial autoregression model for fiscal choice in order to estimate the best response curve where a department’s rate of taxation meets the rate voted by the neighboring départements for the same tax. We will show that for 1999, the scenario of horizontal fiscal interactions cannot be ruled out for three of the four département taxes analyzed, especially for business tax, which only affects companies. On the other hand, how the local residence tax is set, which only affects households, does not seem to be influenced by the decisions of competing départements. These results are compatible with both Wildasin’s tax competition model (1988) and models of competition by comparison, following Besley and Case (1995a).