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Tax Decentralization and Public Deficits in OECD Countries

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  • Thushyanthan Baskaran

Abstract

This article explores the effect of sub-national tax autonomy and sub-national control over shared taxes on primary deficits with panel data for 23 OECD countries over the 1975--2000 period. The results suggest that sub-national tax autonomy has a U-shaped effect on primary deficits. We find that the "average" country in the sample could increase the fiscal stability of its public sector by reducing sub-national tax autonomy. There is also some indication that sub-national control over shared taxes increases fiscal stability, but we obtain this result only if Belgium and Spain are included in the sample. Copyright 2012, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Publius: The Journal of Federalism.

Volume (Year): 42 (2012)
Issue (Month): 4 (October)
Pages: 688-707

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Handle: RePEc:oup:publus:v:42:y:2012:i:4:p:688-707

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  1. Neyapti, Bilin, 2010. "Fiscal decentralization and deficits: International evidence," European Journal of Political Economy, Elsevier, vol. 26(2), pages 155-166, June.
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  17. de Mello, Luiz Jr, 2000. "Fiscal Decentralization and Intergovernmental Fiscal Relations: A Cross-Country Analysis," World Development, Elsevier, vol. 28(2), pages 365-380, February.
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Cited by:
  1. Oto-Peralías, Daniel & Romero-Ávila, Diego & Usabiaga, Carlos, 2013. "Does fiscal decentralization mitigate the adverse effects of corruption on public deficits?," European Journal of Political Economy, Elsevier, vol. 32(C), pages 205-231.
  2. Benjamin Larin & Bernd Süssmuth, 2014. "Fiscal Autonomy and Fiscal Sustainability: Subnational Taxation and Public Indebtedness in Contemporary Spain," CESifo Working Paper Series 4726, CESifo Group Munich.
  3. Andrea Filippo Presbitero & Agnese Sacchi & Alberto Zazzaro, 2014. "Property Tax and Fiscal Discipline in OECD Countries," Mo.Fi.R. Working Papers 95, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.

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