TO WHAT EXTENT IS THE LOCAL TAX INCREASE APPROPRIATE?

Fiscality represents a major decision factor for investment as it represents an important cost of every business transaction regardless of its type, size or geographical location. In this respect, we find that a legislative initiative could be a solution worthy of being taken into consideration, an initiative that would allow each locality - regardless of its rank - to provide its citizens with standards in accordance with their efforts. Tax federalization may allow higher efficiency in spending public resources that are never abundant enough, and also greater political accountability. Moreover, tax federalization could also be beneficial for increasing Romania’s degree of democracy, as the decisions directly concerning the citizen are brought much closer to him/her so that he/she can control them more easily, by vote or by a proper spending of taxes he/she pays. The paper analyses the usual arguments discussed about fiscal federalization through normative and positive (public choice) approaches.fiscality; local tax; tax increase; tax federalization; public choice