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Subnational Taxation In Developing Countries: A Review Of The Literature

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  • RICHARD M. BIRD

    (Rotman School of Management, University of Toronto, Canada)

Abstract

This paper reviews the literature on tax assignment in decentralised countries. Ideally, own-source revenues should be sufficient to enable at least the richest subnational governments to finance from their own resources all locally-provided services that primarily benefit local residents. Subnational taxes should also not unduly distort the allocation of resources. Most importantly, to the extent, possible subnational governments should be accountable at the margin for financing the expenditures for which they are responsible. Overall, the 'best' package for any particular country or subnational government is likely to be not only context-specific and path-dependent, but also highly sensitive to the balance struck between different political and economic factors and interests.

Suggested Citation

  • Richard M. Bird, 2011. "Subnational Taxation In Developing Countries: A Review Of The Literature," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 139-161.
    • Handle: RePEc:wsi:jicepx:v:02:y:2011:i:01:n:s1793993311000269
    DOI: 10.1142/S1793993311000269
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    References listed on IDEAS

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    1. Richard M. Bird & Robert D. Ebel (ed.), 2007. "Fiscal Fragmentation in Decentralized Countries," Books, Edward Elgar Publishing, number 3864.
    2. Hansjörg Blöchliger & Josette Rabesona, 2009. "The Fiscal Autonomy of Sub-Central Governments: An Update," OECD Working Papers on Fiscal Federalism 9, OECD Publishing.
    3. Gianluigi Galeotti & Pierre Salmon & Ronald Wintrobe, 2000. "Competition and Structure: The Political Economy of Collective Decisions," Post-Print hal-00445583, HAL.
    4. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
    5. Roy Bahl & Jorge Martinez-Vazquez, 2013. "Sequencing Fiscal Decentralization," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 641-687, November.
    6. Richard M. Bird & François Vaillancourt & Édison Roy-César, 2010. "Is Decentralization "Glue" or "Solvent" for National Unity?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1003, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Richard M. Bird & Enid Slack (ed.), 2004. "International Handbook of Land and Property Taxation," Books, Edward Elgar Publishing, number 3304.
    8. Gianluigi Galeotti & Albert Breton, 1986. "An Economic Theory of Political Parties," Kyklos, Wiley Blackwell, vol. 39(1), pages 47-65, February.
    9. Benno Torgler, 2007. "Tax Compliance and Tax Morale," Books, Edward Elgar Publishing, number 4096.
    10. Hansjörg Blöchliger & Oliver Petzold, 2009. "Finding the Dividing Line Between Tax Sharing and Grants: A Statistical Investigation," OECD Working Papers on Fiscal Federalism 10, OECD Publishing.
    11. Bird,Richard & Gendron,Pierre-Pascal, 2011. "The VAT in Developing and Transitional Countries," Cambridge Books, Cambridge University Press, number 9781107401440.
    12. Pranab Bardhan & Dilip Mookherjee (ed.), 2006. "Decentralization and Local Governance in Developing Countries: A Comparative Perspective," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524546, December.
    13. Otaviano Canuto & Marcelo Giugale, 2010. "The Day After Tomorrow : A Handbook on the Future of Economic Policy in the Developing World," World Bank Publications - Books, The World Bank Group, number 2507, December.
    14. Liu, Lili & Waibel, Michael, 2008. "Subnational insolvency : cross-country experiences and lessons," Policy Research Working Paper Series 4496, The World Bank.
    15. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale and Governance Quality," CREMA Working Paper Series 2007-17, Center for Research in Economics, Management and the Arts (CREMA).
    16. Jorge Martinez-Vazquez & Mark Rider & Sally Wallace, 2008. "Tax Reform in Russia," Books, Edward Elgar Publishing, number 2368.
    17. Richard M. Bird & François Vaillancourt, 2006. "Perspectives on Fiscal Federalism," World Bank Publications - Books, The World Bank Group, number 6953, December.
    18. Galeotti,Gianluigi & Salmon,Pierre & Wintrobe,Ronald (ed.), 2000. "Competition and Structure," Cambridge Books, Cambridge University Press, number 9780521771337.
    19. Wallack,Jessica & Srinivasan,T. N. (ed.), 2006. "Federalism and Economic Reform," Cambridge Books, Cambridge University Press, number 9780521855808.
    20. Jonathan A. Rodden & Gunnar S. Eskeland (ed.), 2003. "Fiscal Decentralization and the Challenge of Hard Budget Constraints," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182297, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Fiscal decentralisation; subnational taxes; tax assignment; H70; H71; H77;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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