If the citizen (as you say) is deciding between paying taxes or buying transit tickets on a monetary basis, he or she will choose the cheapest option, and the city will lose out on revenue. On a purely financial basis making this the citizen's choice cannot be a win-win for the citizen and the city.
Besides the above argument, it is also unlikely that there is any possibility of net revenue to the city. Even if a few people irrationally decide to pay more taxes than they were paying in transit fares, and hence generate some revenue, there are presumably only a small minority of the population who make this decision. But these additional tax revenues have to cover not just what these citizens were spending on their own transit passes, but also the loss in revenue to the city from everyone else in the city not paying for transit anymore.
Certainly, it is likely that free public transport enhances the economy and generates revenue in other ways, but it does not add up in the way you have presented it.
It doesn't make sense because you don't understand how registered addresses and taxes work in the former eastern bloc. It's common for people to move to a large city and officially still be registered as living at home. Sometimes it's due to laziness, sometimes they don't want to get the paperwork to get registered at their new address, sometimes they just like having mom take care of all their paperwork/tickets/etc.
Free public transportation is incentivizing these people to register where they actually live. They aren't paying more in taxes, they've just registered as official residents of the city, so their taxes are counted as being paid in the city.
It's not just the Eastern Bloc - it's not uncommon in the US, particularly among recent college grads who move to a new state, to not get a new driver's license (which costs $), or to avoid getting new license plates on a car and summarily to avoid the higher insurance costs in that locality, etc..
With respect to auto insurance, the insurance contract is governed by the laws of the state in which the car is registered, however the rate paid is based on where the car is principally garaged. If someone is paying a lower rate by not correctly listing where they live, that is insurance fraud (albeit of the small time variety), and depending on the state can void coverage or incur other penalties.
Citizens are paying taxes anyways - in the city/province of their residency. So for the citizen - changing the residency doesn't cost anything and you get free public transport.
So this is a net positive for the city (but not for the country as a whole I guess).
I see, that does change things. Thanks for explaining that -- it is quite different than in North America, where municipal taxes are generally added on top of provincial or federal taxes. For example, many wealthy NYC residents go to great extremes to avoid the municipal tax, which they can do by spending enough time out of the city [0].
I guess to the point of Berlin, do municipal taxes work the Estonian way or the North American way in Germany?
Basically all of Germany's taxation happens at the federal level. The taxes that happen at the municipality level are largely property taxes, can't really avoid that by moving around.
That's the spending side. Tax collection happens federally. As you can see
>"Das Ländersteueraufkommen stieg im Haushaltsjahr 2016 gegenüber dem Vorjahr erneut deutlich um 9,9 % auf 22,3 Mrd."
Only 22 billion of the 600 billion euros are collected at the regional level, about half of it is spent by regional administration. Given that OP was asking about the former and specifically avoidance, how the money is spend doesn't seem that relevant.
This is true, but there are still incentives to fake your residency. For example, you only have to pay the Rundfunkbeitrag (17,50 € per month for the public media) once per household, so students can save money by pretending to live at their parents' place. For car taxes it's usually better to be registered outside of urban areas. The government even changed the law to make faking your residency harder, now you have to register with some form that has to be signed by your landlord.
The cities/municipals do get federal money proportional to the number of peope registered there, and technically it's illegal not to register yourself when you move cities, but students still do the "I live at my parents'" thing.
If the citizen (as you say) is deciding between paying taxes or buying transit tickets on a monetary basis, he or she will choose the cheapest option, and the city will lose out on revenue. On a purely financial basis making this the citizen's choice cannot be a win-win for the citizen and the city.
Besides the above argument, it is also unlikely that there is any possibility of net revenue to the city. Even if a few people irrationally decide to pay more taxes than they were paying in transit fares, and hence generate some revenue, there are presumably only a small minority of the population who make this decision. But these additional tax revenues have to cover not just what these citizens were spending on their own transit passes, but also the loss in revenue to the city from everyone else in the city not paying for transit anymore.
Certainly, it is likely that free public transport enhances the economy and generates revenue in other ways, but it does not add up in the way you have presented it.