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

Andrés Álvarez, Brigitte Casta√±eda and Marc Hofstetter
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Brigitte Castañeda: Universidad de los Andes

Authors registered in the RePEc Author Service: Brigitte Castaneda Rodriguez

No 21389, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

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

Keywords: Taxes; royalties; resource curse. (search for similar items in EconPapers)
JEL-codes: H71 H72 H83 P11 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2025-06-16
New Economics Papers: this item is included in nep-lam and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:021389

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