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Intergovernmental Transfers in Latin America: A Policy Reform Perspective

This paper reviews some of the main issues with intergovernmental transfers in Latin America. The analysis is set against the backdrop of the basic normative principles of revenue assignments and the practice of sub-national government financing in the region. Own revenue collections and an equalization transfer program are key components of a sound sub-national fiscal structure. However, in most Latin American countries own revenue collections represent a minor share of sub-national revenues and equalization programs, if present, are generally not properly designed. Instead, sub-national finances in the region heavily rely on revenue sharing schemes with often multiple and unclear objectives and with negative effects on equity and economic efficiency. In this paper we provide a critical analysis of those revenue sharing schemes utilized in Latin America, and propose an alternative approach to the structuring of the transfer systems and more generally of the sub-national revenue systems in the region.

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File URL: http://icepp.gsu.edu/files/2015/03/ispwp1108.pdf
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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper1108.

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Length: 31 pages
Date of creation: 10 May 2011
Date of revision:
Handle: RePEc:ays:ispwps:paper1108
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Web page: http://aysps.gsu.edu/isp/index.html

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  1. Jorge Martinez-Vazquez & Andrey Timofeev, 2005. "Choosing between Centralized and Decentralized Models of Tax Administration," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0502, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. Richard Bird & Andrey Tarasov, 2002. "Closing the Gap: Fiscal Imbalaces and Intergovernmental Transfers in Developed Federations," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0202, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Charles E. McLure, Jr. & Jorge Martinez-Vazquez, 1998. "Intergovernmental Fiscal Relations in Vietnam," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9802, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  4. Jameson Boex & Jorge Martinez-Vazquez, 2004. "Designing Intergovernmental Equalization Transfers with Imperfect Data: Concepts, Practices, and Lessons," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0421, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  5. Ana Herrero-Alcalde & Jorge Martinez-Vazquez & Encarnación Murillo-García, 2010. "Capital Transfers and Equalization: An Application to Spanish Regions," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1025, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  6. 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.
  7. Roy Bahl, 1999. "Implementation Rules For Fiscal Decentralization," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9901, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  8. Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
  9. Richard.M. Bird & Roy Bahl, 2009. "Subnational Taxes in Developing Countries: The Way Forward," Working Papers id:2072, eSocialSciences.
  10. Andr�s Rodr�guez-Pose & Nicholas Gill, 2004. "Is there a global link between regional disparities and devolution?," Environment and Planning A, Pion Ltd, London, vol. 36(12), pages 2097-2117, December.
  11. B. Dahlby & L. S. Wilson, 1994. "Fiscal Capacity, Tax Effort, and Optimal Equalization Grants," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 657-72, August.
  12. Shah, Anwar, 2004. "Fiscal decentralization in developing and transition economies: progress, problems, and the promise," Policy Research Working Paper Series 3282, The World Bank.
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