Fiscal Decentralization and Decentralizing Tax Administration: Different Questions, Different Answers

27 Pages Posted: 25 Nov 2015

See all articles by Richard M. Bird

Richard M. Bird

University of Toronto - Joseph L. Rotman School of Management; Georgia State University - Andrew Young School of Public Policy

Date Written: November 23, 2015

Abstract

The case for decentralizing taxes does not imply that these taxes need to be administered locally. Nor is it is necessarily constrained by the weakness of local tax administration. Tax decentralization and the decentralization of tax administration are related but separable decisions. As discussed in this paper, different countries have at different times have reached different conclusions about the appropriate way to mix and match these issues. No country may have it quite right when taking all the relevant factors into consideration, at least when viewed from outside. However, decisions on such matters are not made outside but inside specific countries, few involved in such decisions are likely to attach the same weights to all factors, and usually no one has the full story in mind when decisions are made. As with many questions of institutional design, there is no one size fits all correct answer to either the question of the extent to which taxes should be decentralized or the question of whether such taxes should also be administered in a decentralized fashion. However, thinking through these two distinct questions separately can be a useful step towards achieving better outcomes.

Keywords: fiscal decentralization, tax administration, Canada, China, Germany, Spain

JEL Classification: H7, H83, P35, P43, O57

Suggested Citation

Bird, Richard Miller, Fiscal Decentralization and Decentralizing Tax Administration: Different Questions, Different Answers (November 23, 2015). Rotman School of Management Working Paper No. 2694651. Available at SSRN: https://ssrn.com/abstract=2694651 or http://dx.doi.org/10.2139/ssrn.2694651

Richard Miller Bird (Contact Author)

University of Toronto - Joseph L. Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
905-274-8841 (Phone)

Georgia State University - Andrew Young School of Public Policy

International Studies Program
Atlanta, GA 30303-3083
United States

HOME PAGE: http://www.aysps.gsu.edu

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