Sub-National Revenue Mobilization in Peru
International Center for Public Policy Working Paper No. 12-09
100 Pages Posted: 7 Dec 2012
Date Written: February 1, 2012
This paper analyses the problem of sub-national revenue mobilization in Peru and proposes several policy reforms to improve collection performance while maintaining a sound revenue structure. We analyze the current revenues of regional and municipal governments and identify the main priorities of reform. Among the most important problems are the acute inequalities and inefficiencies associated with the revenue sharing from extractive industries. These revenues represent a significant share of sub-national budgets and currently they are distributed without consideration of the relative expenditure needs or fiscal capacity of sub-national units. In order to address this problem we propose the incorporation of a measure of fiscal capacity in the formula of the FONCOMUN, the municipal equalization transfer program. Other reforms explored include the reassignment of revenue sources between municipal provincial and district governments and the assignment of new taxes to regional governments.
Keywords: revenue mobilization, fiscal decentralization, Peru
JEL Classification: H11, H21, H71, H73
Suggested Citation: Suggested Citation