Unstable Tax Revenue: Differences between Municipalities and Explaining Factors Josef Perrez Statistical Office, Kanton of Zurich

2 Major sources of Municipalities’ Revenue in Zurich Earnings per capita (CHF) Taxes Fees Specific Return on Non-specific support capital support

3 Part of Taxes Paid by Individuals Percent Number of Municipalities

4 Tax Revenue Index (1987 = 100) Taxes paid by individuals Taxes paid by firms

5 Tax Revenue from Individuals Index (1987 = 100)

6 Tax Revenue of Sternenberg Mio. CHF Tax revenue with constant growth Actual tax revenue

7 Volatility of Tax Revenue Per cent

8 Volatility of Tax Revenue of the Zurich Municipalities Variance of annual changes

9 Volatility of Tax Revenue of Uster Per cent Taxes paid by individuals Taxes paid by firms

10 Estimation Results

11 Conclusions The volatility of tax revenue is a cost for municipalities The volatility of tax revenue varies between municipalities Three factors influence municipalities’ tax revenue significantly: –the size of the municipalities –the inequality of the income distribution –the relative importance of taxes paid by firms Fiscal policy focusing on a trade off between risk and return should build up a broad tax base

12 Thank You for Your Attention For more details: Statistisches Amt des Kantons Zürich