Rethinking Subnational Taxes: A New Look At Tax Assignment

Richard Bird

No 1999/165, IMF Working Papers from International Monetary Fund

Abstract: The assignment of revenues in most developing and transitional countries to the central government has arguably facilitated irresponsible behavior by some subnational governments. One way to relieve this problem is to strengthen subnational tax regimes. The paper proposes two approaches to accomplish such strengthening in developing countries. The first—most applicable to large countries with important regional governments—is to establish subnational value-added taxes (VATs); the second is to replace the various unsatisfactory state and local taxes imposed on business by a low-rate value-added tax levied on the basis of income (production, origin) rather than consumption (destination).

Keywords: WP; tax assignment; central government; developing country; provincial sales tax; tax administration; Subnational taxes; Local business taxes; Regional governments; local government; state ICMS; government needs; beggar-my-neighbor tax competition; national government; state VAT; multitiered government; importing state; destination state; Subnational tax; Value-added tax; Revenue assignments; Expenditure assignments; Corporate income tax; Africa; Global (search for similar items in EconPapers)
Pages: 54
Date: 1999-12-01
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Citations: View citations in EconPapers (54)

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