Rethinking Subnational Taxes: A New Look at Tax Assignment

54 Pages Posted: 10 Feb 2006

See all articles by Richard M. Bird

Richard M. Bird

affiliation not provided to SSRN

Date Written: December 1999

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: Tax assignment, Subnational taxes, Local business taxes, Regional governments

JEL Classification: H7, H70

Suggested Citation

Bird, Richard Miller, Rethinking Subnational Taxes: A New Look at Tax Assignment (December 1999). IMF Working Paper No. 99/165, Available at SSRN: https://ssrn.com/abstract=880820

Richard Miller Bird (Contact Author)

affiliation not provided to SSRN

No Address Available

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