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The role of direct taxes in fiscal decentralization

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  • Luca Gandullia

    ()
    (University of Genoa, Italy)

Abstract

The aim of the paper is to review the economic theory of tax assignment across levels of government and the international experience in the use of direct taxes – personal income taxes and taxes on profits and on business value added – for fiscal decentralization. We highlight that as for other options of local taxation there are merits but also drawbacks in the use of direct taxes as a source of financing for sub-central governments and so the final choice about their use or not is a matter of judgment and depends on the political priority to be attached to different objectives, such as efficiency, equity, accountability, tax competition, administrative feasibility and revenue adequacy.

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File URL: http://www.dep.unige.it/RePEc/gea/wpaper/dwpo-6-sep2012.pdf
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Bibliographic Info

Paper provided by University of Genoa, Research Doctorate in Public Economics in its series DEP - series of economic working papers with number 6/2012.

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Date of creation: Sep 2012
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Handle: RePEc:gea:wpaper:6/2012

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Postal: University of Genoa c/o Marcello Montefiori via Vivaldi, 5 16126 Genova ITALY
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Keywords: direct taxes; fiscal decentralization; tax assignment;

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References

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  1. Isabelle Joumard & Per Mathis Kongsrud, 2003. "Fiscal Relations across Government Levels," OECD Economics Department Working Papers 375, OECD Publishing.
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  15. Isabelle Joumard & Tadashi Yokoyama, 2005. "Getting the Most Out of Public Sector Decentralisation in Japan," OECD Economics Department Working Papers 416, OECD Publishing.
  16. Goodspeed, Timothy J., 2000. "Tax structure in a federation," Journal of Public Economics, Elsevier, vol. 75(3), pages 493-506, March.
  17. David King & Yue Ma, 2000. "Decentralization and macroeconomic performance," Applied Economics Letters, Taylor & Francis Journals, vol. 7(1), pages 11-14.
  18. Scott, Charles E. & Triest, Robert K., 1993. "The Relationship Between Federal and State Individual Income Tax Progressivity," National Tax Journal, National Tax Association, vol. 46(2), pages 95-108, June Cita.
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  20. Isabelle Joumard & Claude Giorno, 2005. "Getting the Most Out of Public Sector Decentralisation in Spain," OECD Economics Department Working Papers 436, OECD Publishing.
  21. McLure, Charles E. Jr., 2001. "The Tax Assignment Problem: Ruminations on How Theory and Practice Depend on History," National Tax Journal, National Tax Association, vol. 54(n. 2), pages 339-64, June Cita.
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  23. Isabelle Joumard & Wim Suyker, 2002. "Options for Reforming the Finnish Tax System," OECD Economics Department Working Papers 319, OECD Publishing.
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Cited by:
  1. Richard M. Bird, 2013. "Below the Salt: Decentralizing Value-Added Taxes," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1302, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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