Re-designing Equalization Transfers: An Application to South Africa's Provincial Equitable Share

James Alm () and Jorge Martinez-Vazquez ()

No 1510, Working Papers from Tulane University, Department of Economics

Abstract: In this paper we examine the design of transfer systems, focusing on the Provincial Equitable Share (PES) in the Republic of South Africa. Provinces in South Africa have been assigned a wide range of responsibilities. Because provinces are almost completely reliant on transfers from the central government, the design of the PES is of critical importance, especially in its ability to achieve the goal of "equalization" across provinces. Our specific conclusion is that the PES largely fails in its efforts to equalize across provinces. Our more general conclusion that follows from this is that the PES attempts to achieve too many conflicting goals, and so it necessarily fails to achieve all goals equally or well, especially in its ability to equalize. We conclude with suggestions for ways to reform the PES to better achieve the goal of equalization, lesson that also apply to other countries.

Keywords: fiscal decentralization; equalization; fiscal capacity; expenditure norms (search for similar items in EconPapers)
JEL-codes: H77 O12 P43 (search for similar items in EconPapers)
Date: 2015-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://repec.tulane.edu/RePEc/pdf/tul1510.pdf First Version, January 2015 (application/pdf)

Related works:
Journal Article: Re-designing equalization transfers: an application to South Africa provincial equitable share (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:tul:wpaper:1510

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