Sub-National Revenue Mobilization in Peru

Andrew Young School of Policy Studies Research Paper Series No. 12-22

International Center for Public Policy Working Paper No. 12-09

100 Pages Posted: 7 Dec 2012

See all articles by Gustavo J. Canavire-Bacarreza

Gustavo J. Canavire-Bacarreza

Inter-American Development Bank (IDB); IZA Institute of Labor Economics

Jorge Martinez-Vazquez

Georgia State University - Andrew Young School of Policy Studies

Cristian F. Sepulveda

Farmingdale State College, SUNY

Multiple version iconThere are 2 versions of this paper

Date Written: February 1, 2012

Abstract

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

Canavire Bacarreza, Gustavo Javier and Martinez-Vazquez, Jorge and Sepulveda, Cristian F., Sub-National Revenue Mobilization in Peru (February 1, 2012). Andrew Young School of Policy Studies Research Paper Series No. 12-22. Available at SSRN: https://ssrn.com/abstract=2186159 or http://dx.doi.org/10.2139/ssrn.2186159

Gustavo Javier Canavire Bacarreza

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Jorge Martinez-Vazquez (Contact Author)

Georgia State University - Andrew Young School of Policy Studies ( email )

University Plaza
PO Box 3992
Atlanta, GA 30302-3992
United States
404-651-3990 (Phone)
404-651-3996 (Fax)

Cristian F. Sepulveda

Farmingdale State College, SUNY ( email )

School of Busines
Farmingdale, NY 11735

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