With the fall of the Berlin wall, and the subsequent collapse of communism, an era of reforms was initiated in Central and Eastern Europe and Central Asia which has spread around the globe. A central element in this reform process has been an interest in decentralizing governmental decision making from the central government to autonomous local self-governments. A critical element in such a decentralization strategy is the need for local governments to have their own source of revenue controlled by local officials. Specifically, to fully realize the efficiency benefits of fiscal decentralization, autonomous local governments require that they generate adequate own-source revenues to provide the level and quality of services demanded by residents and businesses.
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