In this paper, local government taxes on business in Britain and Germany are examined from the point of view of criteria for a ‘good’ local tax. The following criteria are evaluated: Ability to pay; support for national economic objectives (intranational allocation, international competition); distribution and stabilization; collection and compliance costs; local authority requirements of revenues, tax rates, stability, and response to growth; and interarea effects. Comparison of the two countries shows major deficiencies with both tax systems, as well as with many reform proposals. The recent British Green Paper is evaluated in particular and criticized for its divorce of accountability to businesses.
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