Earmarking government revenues in Colombia

This paper has two broad objectives. The first is the examination of the trends in the size and structure of earmarking since 1970, illuminating the major changes and their causes. The second is an evaluation of the major examples of earmarking with a view toward making recommendations for change. In making recommendations for reducing the scope of earmarking in Colombia, several principles should be used for guidance: (a) is there a substantial overlap between the beneficiaries and the tax/price payers for any given government service; (b) do the tax/price arrangements appear to be leading to appropriate levels of the service over time; and (c) are resources being utilized effectively for the purpose intended. The remainder of the paper is divided into four parts: (a) time series data on the size and structure of earmarking during the last two decades; (b) factors behind the popularity of earmarking in Colombia and a review of the findings and recommendations of two major government commissions which have examined the subject; (c) a critical review of the major examples which make up over 90% of total earmarking; and (d) a summary of major findings and recommendations for changes.