Previous works emphasize the role of tax rates as the key feature of tax competition. This paper brings into attention how local jurisdictions consider the level of public provision in infrastructure and the business tax rates as strategic complements to compete for capital. We use a spatial Durbin model to estimate the impact of a change in the public infrastructure of a particular jurisdiction on one’s own and on their neighbors’ business tax rates. Using data for approximately 5,000 municipalities in Brazil over a seven-year period, our main findings indicate that local governments reactions to tax rate reductions from neighboring jurisdictions are associated in three possible ways: also decreasing their effective tax rates, increasing their public infrastructure spending, or combining both strategies.

以前的工作强调税率作为税收竞争的关键特征的作用。本文关注地方司法管辖区如何将基础设施的公共供给水平和营业税率视为竞争资本的战略补充。我们使用空间杜宾模型来估计特定司法管辖区的公共基础设施变化对自己及其邻居的营业税率的影响。使用巴西大约 5,000 个城市在七年期间的数据，我们的主要发现表明，地方政府对邻近辖区税率降低的反应与三种可能的方式相关：同时降低有效税率，增加公共基础设施支出，或结合两种策略。