Moral Hazard in Property Tax Administration: A Comparative Analysis of the Czech and Slovak Republics

Fiscal decentralisation in the Czech and Slovak Republics has only begun to establish local autonomy. In Slovakia, unusual politics have resulted in sparse revenue transfers but somewhat greater fiscal independence for municipalities through the property tax. The Czech Republic, more generous to its municipalities, has not let local governments develop autonomously. The property tax, the best vehicle for generating independent funds, remains largely symbolic, as under central planning. The tax's moral hazard problems become apparent in comparing Czech and Slovak local budgets. As a result of greater fiscal need, Slovak municipalities have demonstrated what can be achieved through greater property tax collection effort. Comparative Economic Studies (2003) 45, 44–62. doi:10.1057/palgrave.ces. 8100003