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The Dilemma of Decentralization in Colombia

Author

Listed:
  • Olga Lucia Acosta

    (Fedesarrollo and Universidad de Rosario)

  • Richard M. Bird

    () (International Tax Program, Rotman School of Management, University of Toronto)

Abstract

This paper sketches the general course of Colombian decentralization over the last two decades. One section of the paper focuses on the intermediate level of subnational government, the departments. We argue that the present situation is inherently untenable. Either departments must be cut back to tasks they can handle, or they must be strengthened to be able to handle the tasks they have. We explore the extent to which the present problems can be resolved by such incremental changes as better use of existing department revenue sources, more systematic “categorization” of departments with respect to expenditure responsibilities, and a revised transfer system. The paper also considers the even more diverse and complex problems at the municipal level. The final section suggests that it is not so much the level as the structure of transfers -- whatever their level -- that lies at the heart of the dilemma of decentralization in Columbia. Reform or transfer design, like bestowing more fiscal autonomy (but not more taxing power) on those who can tax themselves, is central to creating the incentive structure needed to resolve this dilemma. The key question, however, is whether the coalition of political interests that gave rise to the present system cannot only be brought to see the need for such changes but also to support them for a sufficiently long period to produce results.

Suggested Citation

  • Olga Lucia Acosta & Richard M. Bird, 2003. "The Dilemma of Decentralization in Colombia," International Tax Program Papers 0404, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
  • Handle: RePEc:ttp:itpwps:0404
    as

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    File URL: http://www-2.rotman.utoronto.ca/iib/ITP0404.pdf
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    References listed on IDEAS

    as
    1. Bird, Richard, 2010. "Taxation and Development," World Bank - Economic Premise, The World Bank, issue 34, pages 1-5, September.
    2. Alejandro Gaviria Uribe & Juan Gonzalo Zapata & Adriana González, 2002. "Petróleo y región: El caso del Casanare," CUADERNOS DE FEDESARROLLO 012733, FEDESARROLLO.
    3. Richard M. Bird & Sally Wallace, 2003. "Taxing Alcohol in Africa: Reflections from International Experience," International Tax Program Papers 0304, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Nov 2003.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Roy Bahl & Musharraf Cyan, 2009. "Local Government Taxation in Pakistan," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0909, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    2. Jaime Bonet Morón, 2007. "Regalías y finanzas públicas en el Departamento del Cesar," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL Y URBANA 004308, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
    3. Jaime Alfredo Bonet & Fabio Rueda, 2012. "Esfuerzo fiscal en los estados mexicanos," IDB Publications (Working Papers) 64598, Inter-American Development Bank.
    4. Richard M. Bird, 2008. "Tax Assignment Revisited," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0805, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Ignacio Lozano & Jorge Ramos & Hernán Rincón, 2007. "Implicaciones Fiscales y Sectoriales de la Reforma a las transferencias Territoriales en Colombia," BORRADORES DE ECONOMIA 002816, BANCO DE LA REPÚBLICA.
    6. Jaime Bonet, 2006. "Desequilibrios regionales en la política de descentralización en Colombia," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL Y URBANA 002293, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
    7. Richard M Bird & Joosung Jun, 2005. "Earmarking in Theory and Korean Practice," International Tax Program Papers 0513, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
    8. Hernán Rincón & Jorge Ramos & Ignacio Lozano, 2004. "Crisis Fiscal Actual: Diagnóstico Y Recomendaciones," BORRADORES DE ECONOMIA 002244, BANCO DE LA REPÚBLICA.
    9. Giorgio Brosio & Ehtisham Ahmad, 2008. "Political Economy of Multi-Level Tax Assignments in Latin American Countries; Earmarked Revenue Versus Tax Autonomy," IMF Working Papers 08/71, International Monetary Fund.
    10. World Bank & European Commission & Food and Agriculture Organization & United Nations Children’s Fund & United Nations Development Program & World Health Organization, 2007. "Angola : Public Expenditure Review, Volume 2. Sectoral Review," World Bank Other Operational Studies 7648, The World Bank.

    More about this item

    Keywords

    Colombia; decentralization; subnational government; Bogota; Medellin; Cali; transfers;

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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