{
  "title": "Oil Revenue Assignments: Country Experiences and Issues",
  "publication": "IMF Working Papers, November 1, 2002",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/oil-revenue-assignments-country-experiences-and-issues-16126",
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  "summary": "Based on country experiences, the paper assesses policy options to assign oil revenues to subnational governments (SNGs). The literature recommends that oil revenues be centralized.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Based on country experiences, the paper assesses policy options to assign oil revenues to subnational governments (SNGs).\n- The literature recommends that oil revenues be centralized.\n- Given political economy considerations, the paper suggests a possible alternative: assign stable oil-tax bases to oil-producing SNGs, supplemented with predictable transfers from the center.\n- Oil revenue-sharing arrangements, although commonly used, are identified as the least preferable solution because they:\n  - complicate macroeconomic management, and\n  - do not provide stable financing.\n- Revenue sharing also does not diffuse separatist tendencies, since oil-producing SNGs would still be better off by keeping their oil revenues in full."
    },
    {
      "heading": "Findings and analysis",
      "content": "- Centralization of oil revenues is the recommendation emerging from the literature reviewed.\n- Political economy considerations can justify delegation of stable oil-tax bases to oil-producing SNGs as an alternative to full centralization.\n- Predictable transfers from the central government are necessary to supplement assigned oil-tax bases to ensure stable financing for SNGs.\n- Revenue-sharing arrangements:\n  - are commonly used in practice,\n  - are judged least preferable because they undermine macroeconomic management and financing stability,\n  - do not remove incentives for separatism among oil-producing SNGs."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Prioritize centralization of oil revenues in line with the literature’s recommendations.\n- Where political economy constraints make full centralization infeasible:\n  - Assign stable oil-tax bases to oil-producing SNGs, and\n  - Supplement assigned bases with predictable transfers from the center to ensure financing stability.\n- Avoid reliance on oil revenue-sharing arrangements because they:\n  - complicate macroeconomic management, and\n  - fail to provide stable financing or to reduce separatist incentives."
    },
    {
      "heading": "Subjects and keywords (as listed)",
      "content": "- Subject: Commodities, Environment, Natural resources, Oil, Oil, gas and mining taxes, Revenue sharing, Subnational tax, Taxes\n- Keywords: Canada, Colombia, federal government, federation revenue, gas and mining taxes, gas revenue, gas-revenue share, income tax, Indonesia, Mexico, national government, natural resource, Natural resources, Nigeria, North America, Oil, oil revenue, oil-producing countries, oil-producing state, oil-revenue fluctuation, revenue base, revenue sharing, Russia, small nation, Subnational tax, tax assignment, United Arab Emirates, United States, Venezuela, WP\n\nSource: Oil Revenue Assignments: Country Experiences and Issues, Eric Mottu and Ehtisham Ahmad, IMF Working Papers, November 1, 2002.\n\n---\n\n Content in this bundle\n\n- Oil Revenue Assignments: Country Experiences and Issues - WP/02/203\n  - Oil Revenue Assignments: Country Experiences and Issues - WP/02/203 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Oil Revenue Assignments: Country Experiences and Issues - WP/02/203 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/oil-revenue-assignments-country-experiences-and-issues-16126"
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    "Authors: Eric Mottu, Ehtisham Ahmad",
    "Published: November 1, 2002",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451874464.001",
    "Based on country experiences, the paper assesses policy options to assign oil revenues to subnational governments (SNGs).",
    "The literature recommends that oil revenues be centralized.",
    "Given political economy considerations, the paper suggests a possible alternative: assign stable oil-tax bases to oil-producing SNGs, supplemented with predictable transfers from the center.",
    "Oil revenue-sharing arrangements, although commonly used, are identified as the least preferable solution because they:",
    "Revenue sharing also does not diffuse separatist tendencies, since oil-producing SNGs would still be better off by keeping their oil revenues in full.",
    "Centralization of oil revenues is the recommendation emerging from the literature reviewed.",
    "Political economy considerations can justify delegation of stable oil-tax bases to oil-producing SNGs as an alternative to full centralization.",
    "Predictable transfers from the central government are necessary to supplement assigned oil-tax bases to ensure stable financing for SNGs.",
    "Revenue-sharing arrangements:",
    "Prioritize centralization of oil revenues in line with the literature’s recommendations.",
    "Where political economy constraints make full centralization infeasible:",
    "Avoid reliance on oil revenue-sharing arrangements because they:",
    "Subject: Commodities, Environment, Natural resources, Oil, Oil, gas and mining taxes, Revenue sharing, Subnational tax, Taxes",
    "Keywords: Canada, Colombia, federal government, federation revenue, gas and mining taxes, gas revenue, gas-revenue share, income tax, Indonesia, Mexico, national government, natural resource, Natural resources, Nigeria, North America, Oil, oil revenue, oil-producing countries, oil-producing state, oil-revenue fluctuation, revenue base, revenue sharing, Russia, small nation, Subnational tax, tax assignment, United Arab Emirates, United States, Venezuela, WP",
    "**Oil Revenue Assignments: Country Experiences and Issues - WP/02/203**"
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