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The role of direct taxes in fiscal decentralization

  • Luca Gandullia

    ()

    (University of Genoa, Italy)

The aim of the paper is to review the economic theory of tax assignment across levels of government and the international experience in the use of direct taxes – personal income taxes and taxes on profits and on business value added – for fiscal decentralization. We highlight that as for other options of local taxation there are merits but also drawbacks in the use of direct taxes as a source of financing for sub-central governments and so the final choice about their use or not is a matter of judgment and depends on the political priority to be attached to different objectives, such as efficiency, equity, accountability, tax competition, administrative feasibility and revenue adequacy.

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File URL: http://www.dep.unige.it/RePEc/gea/wpaper/dwpo-6-sep2012.pdf
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Paper provided by University of Genoa, Research Doctorate in Public Economics in its series DEP - series of economic working papers with number 6/2012.

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Date of creation: Sep 2012
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Handle: RePEc:gea:wpaper:6/2012
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