The Impact of Second Homes on Local Taxes

A methodology to estimate the influence of second homes on municipal taxes is developed in this paper. Assuming that a larger floating population implies an increase in public expenditure, our aim is to develop a model of the relationship between the local taxes paid and the number of second dwellin...

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Bibliographic Details
Published in:Fiscal studies 2006-06, Vol.27 (2), p.231-250
Main Authors: Torres, Emilio, Domínguez-Menchero, J. Santos
Format: Article
Language:English
Subjects:
Costa Blanca
Costa del Sol
Direct taxes
Economic development
Economic impact
Estimated taxes
Expenditures
Fiscal policy
Government spending
Home ownership
Homes
Indirect taxes
Infrastructure
Linear regression
Local finance
Local taxes
Model testing
Municipal taxation
Municipal taxes
Population
Property taxes
Public finance
Public services
Spain
Statistical variance
Studies
Supernova remnants
Tax rates
Tax revenues
Taxation
Taxes
Tourism
Urban development
Vacation homes
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Summary:A methodology to estimate the influence of second homes on municipal taxes is developed in this paper. Assuming that a larger floating population implies an increase in public expenditure, our aim is to develop a model of the relationship between the local taxes paid and the number of second dwellings in a village. As an applied example, the results for two of the most touristy regions of the Mediterranean – the Costa del Sol and the Costa Blanca, in Spain – are shown in this paper. As we will see, there are only three different levels of local taxes, regardless of the number of second homes. The main factors behind high local tax burdens are seaside location and the presence of foreign owners.
ISSN:0143-5671
1475-5890
DOI:10.1111/j.1475-5890.2006.00034.x