Increasing Tax Collections by Local Governments in Developing Countries by Improving Tax Compliance

James Alm () and Zehra Farooq
Additional contact information
Zehra Farooq: Federal Board of Revenue, Ministry of Finance, Federal Government of Pakistan, Islamabad, Pakistan

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: When discussing local government taxation in developing countries, it is impossible to avoid the conclusion that most all local governments in most all developing countries around the world simply fail to collect taxes in amounts sufficient to provide desired and needed government services. What accounts for this failure? And what can be done to address this failure? It is these two basic questions what we seek to address -- if not necessarily to answer -- here. Our first conclusion is an obvious and well-known one: the main reason for low tax collections is that local governments in developing countries have been assigned largely unproductive tax sources, taxes that are often difficult to administer, lack buoyancy, and allow little discretion to local governments. Our second conclusion may seem less obvious and in fact is driven largely by results from the tax compliance literature: tax collections, especially property tax collections, can be increased by local government policy initiatives that increase tax compliance by improving citizen trust in government, and these initiatives can be implemented quickly and effectively in many if not all settings. In the process we also discuss several other dimensions of local taxation in developing countries.

Pages: 51 pages
Date: 2024-12
New Economics Papers: this item is included in nep-iue, nep-pbe and nep-pub
References: Add references at CitEc
Citations:

Downloads: (external link)
https://icepp.gsu.edu/files/2025/01/paper2406.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ays:ispwps:paper2406

Access Statistics for this paper

More papers in International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University Contact information at EDIRC.
Bibliographic data for series maintained by Paul Benson ().