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Explaining Property Tax Collections in Developing Countries: The Case of Latin America

This paper analyzes the problem of collecting property taxes in fiscally decentralized developing economies. The property tax is arguably the most important source of own revenues for local governments around the world, and economists generally agree that, although imperfect, the property tax is a good local tax. In practice, however, the property tax does not always become a productive revenue source and local governments do not gain the fiscal autonomy required to realize the benefits of fiscal decentralization. This problem is rather common among developing economies and particularly severe in Latin America. One of the main reasons for the poor tax performance of Latin American countries seems to be the lack of administrative capacity at the local level. This problem is notably aggravated, we argue, by a deficient design of the fiscal decentralization system. We also identify the main determinants of property tax performance in Latin American countries, and provide guidance for future reforms in the region.

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File URL: http://icepp.gsu.edu/files/2015/03/ispwp1109.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 paper1109.

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Length: 41 pages
Date of creation: 10 May 2011
Date of revision:
Handle: RePEc:ays:ispwps:paper1109
Contact details of provider: Phone: 404-413-0235
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Web page: http://aysps.gsu.edu/isp/index.html

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  1. Richard M. Bird & Jorge Martinez-Vazquez & Benno Torgler, 2004. "Societal Institutions and Tax Effort in Developing Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0406, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. Roy Bahl & Sally Wallace, 2008. "Reforming the Property Tax in Developing Countries: A New Approach," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0819, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  3. Benno Torgler & Markus Schaffner & Alison Macintyre, 2007. "Tax Compliance, Tax Morale, and Governance Quality," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0727, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  4. Sandmo, Agnar, 2005. "The Theory of Tax Evasion: A Retrospective View," National Tax Journal, National Tax Association, vol. 58(4), pages 643-63, December.
  5. Benno Torgler & Markus Schaffner, 2007. "Causes and Consequences of Tax Morale: An Empirical Investigation," CREMA Working Paper Series 2007-11, Center for Research in Economics, Management and the Arts (CREMA).
  6. Benno Torgler, 2005. "Tax morale in Latin America," Public Choice, Springer, vol. 122(1), pages 133-157, January.
  7. Torgler, Benno, 2005. "Tax morale and direct democracy," European Journal of Political Economy, Elsevier, vol. 21(2), pages 525-531, June.
  8. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 818-860, June.
  9. James Alm & Jorge Martinez-Vazquez, 2007. "Tax Morale and Tax Evasion in Latin America," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0704, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  10. 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.
  11. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
  12. Richard.M. Bird & Roy Bahl, 2009. "Subnational Taxes in Developing Countries: The Way Forward," Working Papers id:2072, eSocialSciences.
  13. Richard M. Bird & Enid Slack (ed.), 2004. "International Handbook of Land and Property Taxation," Books, Edward Elgar Publishing, number 3304.
  14. Srinivasan, T. N., 1973. "Tax evasion: A model," Journal of Public Economics, Elsevier, vol. 2(4), pages 339-346.
  15. G. Gulsun Arikan, 2004. "Fiscal Decentralization: A Remedy for Corruption?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(2), pages 175-195, 03.
  16. George R. Zodrow, 2008. "The Property Tax Incidence Debate and the Mix of State and Local Finance of Local Public Expenditures," Working Papers 0801, Oxford University Centre for Business Taxation.
  17. Benno Torgler, 2007. "Tax Compliance and Tax Morale," Books, Edward Elgar Publishing, number 4096.
  18. Joel Slemrod & Shlomo Yitzhaki, 1985. "The Optimal Size of a Tax Collection Agency," NBER Working Papers 1759, National Bureau of Economic Research, Inc.
  19. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  20. James Alm & Jorge Martinez-Vazquez, 2007. "Tax Morale and Tax Evasion in Latin American Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0732, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  21. Mark E Schaffer & Steven Stillman, 2006. "XTOVERID: Stata module to calculate tests of overidentifying restrictions after xtreg, xtivreg, xtivreg2, xthtaylor," Statistical Software Components S456779, Boston College Department of Economics, revised 05 Jan 2016.
  22. Jorge Martinez-Vazquez & Mark Rider, 2008. "The Assignment of the Property Tax: Should Developing Countries Follow the Conventional Wisdom?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0821, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  23. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
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