Why Focus on Spending Needs Factors? The Political Economy of Fiscal Transfer Reforms in Mexico

By Ehtisham Ahmad, Mercedes Garcia-Escribano, José Antonio González Anaya, Ernesto Revilla, Giorgio Brosio, Ben Lockwood

October 1, 2007

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Ehtisham Ahmad, Mercedes Garcia-Escribano, José Antonio González Anaya, Ernesto Revilla, Giorgio Brosio, and Ben Lockwood. Why Focus on Spending Needs Factors? The Political Economy of Fiscal Transfer Reforms in Mexico, (USA: International Monetary Fund, 2007) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

An equalization system ensures that subnational governments can provide similar level of public services at a comparable level of own tax-effort. This paper focuses on the importance of spending needs factors in the design of equalization transfers as well as special purpose transfers-and the role that this could have in setting the agenda for better accountability for recipient governments, illustrating both design and implementation questions with examples from Mexico. The paper also takes into account the difficult political economy constraints to reforming any system of transfers.

Subject: Education, Expenditure, Personal income, Revenue administration, Subnational tax

Keywords: Federal government, Per capita income, Political economy, Tax revenue, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/252
Stock No:

WPIEA2007252
ISBN:

9781451868159
ISSN:

1018-5941

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