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Sub-national Revenue Mobilization in Latin American and Caribbean Countries: The Case of Colombia

Author

Listed:
  • Fabio Sánchez Torres
  • Irina España Eljaiek
  • Jannet Zenteno

Abstract

This paper surveys the evolution and implications of fiscal decentralization in Colombia in recent decades. After describing the fiscal decentralization process and its impact on sub-national finances, the paper presents the evolution of departmental public finances, departmental vertical imbalances and the proposal to levy a VAT surcharge and a retail sales tax for the departments. The paper subsequently describes the evolution of municipal finances and municipal vertical imbalances, then includes calculations of the effective rates of the property and land tax and the industry and commerce tax, estimating the municipal tax burden, the efficiency rate of tax collection, and the determinants of both. The paper concludes with policy recommendations.

Suggested Citation

  • Fabio Sánchez Torres & Irina España Eljaiek & Jannet Zenteno, 2012. "Sub-national Revenue Mobilization in Latin American and Caribbean Countries: The Case of Colombia," IDB Publications (Working Papers) 4191, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:4191
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    References listed on IDEAS

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    1. Ana Maria Iregui & Ligia Melo & Jorge Ramos, 2004. "El Impuesto Predial En Colombia: Evolución Reciente, Comportamiento De Las Tarifas Y Potencial De Recaudo," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, December.
    2. Faguet, Jean-Paul & Sánchez, Fabio, 2008. "Decentralization's Effects on Educational Outcomes in Bolivia and Colombia," World Development, Elsevier, vol. 36(7), pages 1294-1316, July.
    3. Andrew Haughwout & Robert Inman & Steven Craig & Thomas Luce, 2004. "Local Revenue Hills: Evidence from Four U.S. Cities," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 570-585, May.
    4. repec:bdr:ensayo:v:22:y:2004:i:46-2:p:186-248 is not listed on IDEAS
    5. Helmuth Cremer & Maurice Marchand & Pierre Pestieau, 1996. "Interregional redistribution through tax surcharge," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(2), pages 157-173, May.
    6. Cadena Ximena, 2002. "¿La descentralización empereza? Efecto de las transferencias sobre los ingresos tributarios municipales en Colombia," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, September.
    7. Juan David Barón R. & Adolfo Meisel R., 2003. "La descentralización y las disparidades económicas regionales en Colombia en la década de 1990," COYUNTURA ECONÓMICA, FEDESARROLLO, September.
    8. IREGUI, Ana María & Ligia Melo & Jorge Ramos, 2005. "El impuesto predial en Colombia: factores explicativos del recaudo," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, June.
    9. Daniel R. Feenberg & Andrew W. Mitrusi & James M. Poterba, 1997. "Distributional Effects of Adopting a National Retail Sales Tax," NBER Chapters,in: Tax Policy and the Economy, Volume 11, pages 49-90 National Bureau of Economic Research, Inc.
    10. Faguet, Jean-Paul, 2001. "Does decentralization increase responsiveness to local needs? - evidence from Bolivia," Policy Research Working Paper Series 2516, The World Bank.
    11. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
    12. 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.
    13. Ramírez Jaramillo, Juan Carlos & Osorio, Horacio & Parra-Peña S., Rafael Isidro, 2007. "Escalafón de la competitividad de los departamentos en Colombia," Estudios y Perspectivas – Oficina de la CEPAL en Bogotá 16, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    14. Weingast, Barry R., 2009. "Second generation fiscal federalism: The implications of fiscal incentives," Journal of Urban Economics, Elsevier, vol. 65(3), pages 279-293, May.
    15. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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    Citations

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    Cited by:

    1. Vicente Fretes Cibils & Teresa Ter-Minassian & J. Sebastián Scrofina & Federico Ortega & Germán Ríos & Alejandro Rasteletti & Arturo Ramírez Verdugo & Emilio Pineda & Jorge Martínez-Vázquez & Cristián, 2015. "Decentralizing Revenue in Latin America: Why and How (Executive Summary)," IDB Publications (Books), Inter-American Development Bank, number 88387 edited by Vicente Fretes Cibils & Teresa Ter-Minassian, February.
    2. World Bank, 2014. "Towards Sustainable Peace, Poverty Eradication, and Shared Prosperity
      [Hacia la paz sostenible, la erradicación de la pobreza y la prosperidad compartida : notas de política: Colombia]
      ," World Bank Other Operational Studies 21037, The World Bank.
    3. Tania Barham & Karen Macours & John A. Maluccio, 2013. "Boys' Cognitive Skill Formation and Physical Growth: Long-Term Experimental Evidence on Critical Ages for Early Childhood Interventions," American Economic Review, American Economic Association, pages 467-471.
    4. repec:idb:idbbks:6829 is not listed on IDEAS

    More about this item

    Keywords

    Fiscal Policy; Sub-national revenue; Value-added tax; Income tax; Tax;

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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