The Impact of Regional Transformation on Tax Revenue of Municipalities in the Silesian Voivodeship: An Attempt to Develop a Model

Abstract

Theoretical background: Numerous theoretical analyses have examined the issue of municipalities’ capacity to generate their own revenue (referred to as revenue potential or financial independence) or, more broadly, the assessment of municipal financial management (understood as financial autonomy or fiscal stability). However, empirical studies focusing on the impact of specific factors on these processes are relatively rare.Purpose of the article: The purpose of the article is to identify factors describing regional transformation and to develop a model explaining their impact on the tax revenue of municipalities  in the Silesian Voivodeship, using personal income tax revenue as an example.Research methods: An in-depth literature review was conducted to identify and systematize factors describing regional transformation. The research employed panel regression with random effects to determine the impact of selected factors describing regional transformation on personal income tax revenue in the municipalities of the Silesian Voivodeship. The factors describing regional transformation were categorized into social, economic, and environmental-spatial dimensions. The study ultimately utilized indicators representing the influence of selected factors, considering their data availability and quality, as well as the need to maintain their independence as explanatory variables in the model. As a result, a model was developed to explain the relationship between changes in personal income tax revenue and changes in population size, as well as the number of unemployed individuals. The study covered 49 urban municipalities (including cities with county rights) in the Silesian Voivodeship from 2012 to 2022.Main findings: The developed model made it possible to assess the sensitivity of changes in personal income tax revenue to changes in population size and the number of unemployed individuals in the Silesian Voivodeship. Additionally, the model provided insights into the extent to which these factors explain changes in personal income tax revenue, offering a foundation for further research on the impact of regional transformation on the tax revenue of local government units. The attempt to develop the model also led to recommendations for improving data collection, facilitating more effective monitoring of regional transformation.