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Tax Assignment Revisited

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Abstract

This paper first restates the lessons to be learned from Richard Musgrave’s pioneering discussion of the tax assignment issue. Next, it considers subsequent developments in the theory of fiscal federalism related to the issue of tax assignment. Surprisingly little clear guidance is offered by the theoretical discussion when it comes to the practical policy issues facing any country with respect to tax assignment: what countries do seems to bear little relation to what theory suggests they should do. This point is illustrated this point by a brief review of tax assignments observed around the world in large emerging countries. The tax assignment issue in such countries as India and China is both important and unduly neglected: for the most part, these are still countries in search (whether they know it or not) for a sustainable solution to this problem. The paper concludes with some reflections about what seem to be future possible -- or, perhaps better, needed -- developments with respect to both the theory and practice of tax assignment, again with special reference to large emerging countries.

Suggested Citation

  • Richard M. Bird, 2008. "Tax Assignment Revisited," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0805, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper0805
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp0805.pdf
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    1. Pierre Salmon, 2006. "Horizontal Competition Among Governments," Chapters, in: Ehtisham Ahmad & Giorgio Brosio (ed.), Handbook of Fiscal Federalism, chapter 2, Edward Elgar Publishing.
    2. Richard M. Bird, 2012. "Subnational Taxation in Large Emerging Countries: BRIC Plus One," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1201, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    3. Roy Bahl & Jorge Martinez-Vazquez, 2003. "Fiscal Federalism and Economic Reform in China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0313, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
    5. Richard M. Bird & Eric M. Zolt, 2005. "Redistribution via Taxation: The Limited Role of the Personal Income Tax in Developing Countries (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0507, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Jorge Martínez-Vázquez, 2008. "Revenue Assignments in the Practice of Fiscal Decentralization," Chapters, in: Núria Bosch & José M. Durán (ed.), Fiscal Federalism and Political Decentralization, chapter 2, Edward Elgar Publishing.
    7. Michael Smart, 1998. "Taxation and Deadweight Loss in a System of Intergovernmental Transfers," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 189-206, February.
    8. Hansjörg Blöchliger & David King, 2007. "Less than you thought: The fiscal autonomy of sub-central governments," OECD Economic Studies, OECD Publishing, vol. 2006(2), pages 155-188.
    9. Lawrence Kenny & Stanley Winer, 2006. "Tax Systems in the World: An Empirical Investigation into the Importance of Tax Bases, Administration Costs, Scale and Political Regime," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(2), pages 181-215, May.
    10. Oates, Wallace E., 2008. "On the Evolution of Fiscal Federalism: Theory and Institutions," National Tax Journal, National Tax Association;National Tax Journal, vol. 61(2), pages 313-334, June.
    11. Bird, Richard M., 1993. "Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization," National Tax Journal, National Tax Association, vol. 46(2), pages 207-27, June.
    12. Richard A. Musgrave, 1961. "Approaches to a Fiscal Theory of Political Federalism," NBER Chapters, in: Public Finances: Needs, Sources, and Utilization, pages 97-134, National Bureau of Economic Research, Inc.
    13. Jorge Martinez-Vazquez & Mark Rider & Sally Wallace, 2008. "Tax Reform in Russia," Books, Edward Elgar Publishing, number 2368.
    14. Richard M. Bird & François Vaillancourt, 2006. "Perspectives on Fiscal Federalism," World Bank Publications, The World Bank, number 6953, November.
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    Cited by:

    1. Llanto, Gilberto M., 2009. "Fiscal Decentralization and Local Finance Reforms in the Philippines," Discussion Papers DP 2009-10, Philippine Institute for Development Studies.
    2. Andrea Zatti & Fiorenza Carraro, 2013. "Environmental taxation and municipal fiscal federalism: remarks and perspectives on the Italian case study," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2013(2), pages 61-92.

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    Keywords

    tax assignment; fiscal federalism; Richard Musgrave; Brazil; India; China; Nigeria; Russia;
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