Tax Collection in Developing Countries – New Evidence on Semi-Autonomous Revenue Agencies (SARAs)

Abstract

Do semi-autonomous revenue agencies (SARAs) outperform conventional tax administrations? This paper argues that they do. Presenting the results of a panel analysis of local tax collection in Peru between 1998 and 2011, it shows that municipalities with SARAs collect more revenue than those with conventional tax administrations. In line with findings from previous research, the effect is particularly strong in the first two years of operation, but remains significantly positive in subsequent years, after a brief accommodation period. The results also indicate that SARAs generate more stable revenue, meaning that revenue volatility is less pronounced in municipalities with SARAs, which is good for budget policy and planning.

Keywords: Taxation, Semi-autonomous revenue agencies, Tax administration, Peru, Fiscal decentralization