Rethinking Subnational Taxes: A New Look At Tax Assignment
IMF Working Papers, December 1, 1999
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- Canonical URL
- Rethinking Subnational Taxes: A New Look At Tax Assignment
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Bibliographic details
- Authors: Richard Miller Bird
- Published: December 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451858037.001
Overview and central argument
- Author: Richard Miller Bird
- Publication date: December 1, 1999
- Series: Working Paper No. 1999/165; Issue: 165; Volume: 1999; Pages: 54
- DOI: https://doi.org/10.5089/9781451858037.001
- Stock No: WPIEA1651999
- ISBN: 9781451858037
- ISSN: 1018-5941
- Core premise: The assignment of revenues in most developing and transitional countries to the central government has arguably facilitated irresponsible behavior by some subnational governments; strengthening subnational tax regimes can relieve this problem.
Key findings
- Revenue assignment to central governments in most developing and transitional countries can facilitate irresponsible behavior by some subnational governments.
- Two approaches are proposed to strengthen subnational tax regimes in developing countries:
- Establish subnational value-added taxes (VATs), a solution most applicable to large countries with important regional governments.
- Replace various unsatisfactory state and local taxes imposed on business with a low-rate value-added tax levied on the basis of income (production, origin) rather than consumption (destination).
Policy recommendations and design options
- For large, multitiered countries with important regional governments:
- Implement subnational VATs to provide subnational governments with stable and accountable revenue sources.
- For jurisdictions facing fragmented and unsatisfactory local business taxes:
- Replace multiple state and local business taxes with a single low-rate value-added tax based on income (production, origin) rather than consumption (destination).
Thematic scope and subjects covered
- Subjects listed: Corporate income tax; Expenditure assignments; Fiscal policy; Revenue assignments; Subnational tax; Taxes; Value-added tax
- Keywords and thematic elements include: Africa; beggar-my-neighbor tax competition; central government; Corporate income tax; destination state; developing country; Expenditure assignments; Global; government needs; importing state; Local business taxes; local government; multitiered government; national government; provincial sales tax; Regional governments; Revenue assignments; state ICMS; state VAT; Subnational tax; Subnational taxes; tax administration; tax assignment; Value-added tax; WP
Publication and access notes
- Publication type: IMF Working Papers
- Access options indicated on the landing page: Download PDF; More Formats on IMF eLibrary; Order a Print Copy; Create Citation
- Citation example provided on page: Richard Miller Bird. "Rethinking Subnational Taxes: A New Look At Tax Assignment", IMF Working Papers 1999, 165 (1999), accessed 9/13/2026, https://doi.org/10.5089/9781451858037.001
IMF Working Paper No. 1999/165, Richard Miller Bird, December 1, 1999.
Content in this bundle
- Rethinking Subnational Taxes: A New Look at Tax Assignment - WP/99/165