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- Title
Expanding Local Revenues for Promoting Local Development.
- Authors
Bonet, Jaime; Cibils, Vicente Fretes
- Abstract
Latin America (LA) suffers from significant imbalances in fiscal decentralization that constraints local development. As the decentralization process deepened in the region, spending by subnational governments (SG) as a percentage of total government expenditure grew from 20 percent in 1985 to about 30 percenti in 2010. In contrast, the percentage of own-source revenue collected by these governments remained unchanged at about 10 percent of the national total. This difference between subnational government spending and revenue creates high vertical fiscal imbalances in most economies, leaving them heavily dependent on transfers from national to local governments almost two thirds of subnational revenue is transferred from national governments; and makes local government finances more vulnerable and less predictable. To promote local development and fulfill the growing demand for local services arising from urbanization, this article argues that SG in LA should take more responsibility for generating own- revenues. Why i s greater fiscal responsibility at the subnational level desirable? First, it grants authorities greater fiscal policy autonomy. Second, it reduces dependence on central government transfers. And third, it increases the efficiency and transparency of spending, as taxpayers that pay taxes tend to demand more accountability from their leaders.
- Subjects
LOCAL government -- Appropriations &; expenditures; DECENTRALIZATION in government; SUBNATIONAL governments; PUBLIC spending; URBANIZATION; TRANSPARENCY in government
- Publication
Urban Public Economics Review / Revista de Economía Pública Urbana, 2014, Issue 19, p64
- ISSN
1697-6223
- Publication type
Article