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The Dilemma of Decentralization in Colombia

Listed author(s):
  • Olga Lucia Acosta

    (Fedesarrollo and Universidad de Rosario)

  • Richard M. Bird


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

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.

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Paper provided by International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto in its series International Tax Program Papers with number 0404.

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Length: 47 Pages
Date of creation: Dec 2003
Handle: RePEc:ttp:itpwps:0404
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  1. Bird, Richard, 2010. "Taxation and Development," World Bank - Economic Premise, The World Bank, issue 34, pages 1-5, September.
  2. 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.
  3. Alejandro Gaviria Uribe & Juan Gonzalo Zapata & Adriana González, 2002. "Petróleo y región: El caso del Casanare," CUADERNOS DE FEDESARROLLO 012733, FEDESARROLLO.
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