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Spreading Jam Across the National Toast: Royalties and Local Fiscal Capacities

Author

Listed:
  • Álvarez, Andrés

    (Universidad de los Andes)

  • Castañeda, Brigitte

    (Universidad de los Andes)

  • Hofstetter Gascón, Marc

    (Universidad de los Andes)

Abstract

How do subnational tax collection efforts respond to windfall revenues from natural resource royalties? Conversely, what are the fiscal implications when these revenues decline? This paper investigates the effects of Colombia’s 2012 reform, which substantially restructured the allocation of mining royalties among municipalities. By analyzing this legal shift, we assess changes in municipal tax collection behavior. Municipalities that experienced a reduction in royalties intensified their tax collection efforts; however, these efforts did not fully offset the revenue losses. In contrast, municipalities that benefited from increased royalties reduced their tax collection activities, resulting in no net change in overall municipal income. These findings contribute to the literature on the resource curse by offering a subnational perspective on the fiscal dynamics of resource windfalls

Suggested Citation

  • Álvarez, Andrés & Castañeda, Brigitte & Hofstetter Gascón, Marc, 2025. "Spreading Jam Across the National Toast: Royalties and Local Fiscal Capacities," Documentos CEDE 21389, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:021389
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    More about this item

    Keywords

    Taxes; royalties; resource curse.;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform

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