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Given the high dependence on transfers from the federal government, it has traditionally been argued that there reigns a low fiscal effort among the Mexican states. This is a partial approach as a comprehensive assessment of the fiscal performance must be associated to its tributary potential in order to establish whether the administration fittingly leverages its tax-collecting capacity. By applying two methodological proposals to consider the state’s fiscal effort, the Tax Effort Rate (TER) and the Fiscal Potential Usage Rate (FPUR), this article advances in the calculation of the tax effort throughout the Mexican states. In addition, by using panel models, it evaluates the factors that explain the differing fiscal efforts between states. The results show that the approach followed to estimate the tax effort affects the assessment of the inter-state tax management disparity. While the output level per capita, the degree of labor informality and the political affiliation of the governor explain the horizontal imbalances of the FPUR, the transfers determine the TER. The comparison of expected and actual collection of the main generator of tax revenue in the states, the payroll tax, indicates that, in added terms, the tax-collecting effort is close to its potential and, thus, there is limited fiscal room to increase the collection of this duty. A greater state tax effort should focus on the other taxes which fall under their management as well as on exploiting the delegation of certain taxes imposed by the federal government.
This paper analyzes sub-national revenues in Argentina. Following a discussion of the recent evolution of government revenues and their vertical imbalance, the paper then analyzes the most important taxes collected by federal, provincial and local governments. Subsequently considered are the determinants of sub-national revenues and the impact of the 2001-2002 crisis. It is found that automatic tr ... (View publication)
This paper explores the characteristics of the political economy process that conditioned the scope and success of the combination of fiscal reforms before and after Colombia’s 1991 constitutional reforms. Using formal analysis of reforms and interviews with actors, reforms in taxation, decentralization, the budgetary process and pensions are examined in times of political crisis, economic crisis, ... (View publication)
This project examines fiscal reforms in Brazil since the 1990s, particularly in taxation, budgeting, and fiscal federalism. While recentralizing fiscal authority and massively expanding the extractive capacity of the state, policymakers chose not to revamp an inefficient tax system that has nonetheless proven capable of generating high levels of revenue. In budgeting, the economic crises of the mi ... (View publication)
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