IDEAS home Printed from https://ideas.repec.org/p/ays/ispwps/paper1323.html
   My bibliography  Save this paper

Local Taxes and Local Expenditures: Strengthening the Wicksellian Connection

Author

Listed:
  • Richard M. Bird

    (University of Toronto)

  • Enid Slack

    (University of Toronto)

Abstract

One way to design a local tax system is to determine the desired size and nature of local expenditures and then put in place a tax (and transfer) system providing incentives that lead local decision-makers to choose to finance that expenditure package. In practice, however, there are seldom clear links between local taxes and local expenditures and accountability at the local level is often both confused and confusing. This paper discusses how the Wicksellian connection between local services and revenues might be strengthened by changing the ‘package’ of local services, by altering the ‘package’ of local revenues, and by altering the way in which the two packages are tied together, although it considers in depth only the second of these points. The potential importance of this issue is illustrated by a brief review of an on-going discussion about how to finance the regional public transit system in Toronto, Canada. We conclude that, although advances in technology may make an economically more rational local finance system achievable, it is unclear that people (or politicians) are willing to face the economic realities of local finance.

Suggested Citation

  • Richard M. Bird & Enid Slack, 2013. "Local Taxes and Local Expenditures: Strengthening the Wicksellian Connection," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1323, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper1323
    as

    Download full text from publisher

    File URL: http://icepp.gsu.edu/files/2015/03/ispwp1323.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bird, Richard M., 1993. "Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization," National Tax Journal, National Tax Association, vol. 46(2), pages 207-27, June.
    2. Breton,Albert, 1998. "Competitive Governments," Cambridge Books, Cambridge University Press, number 9780521646284, November.
    3. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    4. Richard A. Musgrave, 2000. "Public Finance in a Democratic Society Volume III," Books, Edward Elgar Publishing, number 1795.
    5. Wallace E. Oates & Wallace E. Oates, 2004. "An Essay on Fiscal Federalism," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 22, pages 384-414, Edward Elgar Publishing.
    6. Bos, Dieter, 1985. "Public sector pricing," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 3, pages 129-211, Elsevier.
    7. Richard M. Bird, 2011. "Are There Trends in Local Finance? A Cautionary Note on Comparative Studies and Normative Models of Local Government Finance," IMFG Papers 01, University of Toronto, Institute on Municipal Finance and Governance.
    8. Hansjörg Blöchliger & Josette Rabesona, 2009. "The Fiscal Autonomy of Sub-Central Governments: An Update," OECD Working Papers on Fiscal Federalism 9, OECD Publishing.
    9. Wallace Oates, 2005. "Toward A Second-Generation Theory of Fiscal Federalism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 349-373, August.
    10. Harberger, Arnold C, 1971. "Three Basic Postulates for Applied Welfare Economics: An Interpretive Essay," Journal of Economic Literature, American Economic Association, vol. 9(3), pages 785-797, September.
    11. Institute on Municipal Finance and Governance, 2012. "Moving our Region: Funding Transportation for our Future," IMFG Forum 01, University of Toronto, Institute on Municipal Finance and Governance.
    12. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    13. Bird, Richard M., 1993. "Threading the Fiscal Labyrinth: Some Issues in Fiscal Decentralization," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(2), pages 207-227, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agnese Sacchi & Simone Salotti, 2017. "The influence of decentralized taxes and intergovernmental grants on local spending volatility," Regional Studies, Taylor & Francis Journals, vol. 51(4), pages 507-522, April.
    2. Michael Fenn & André Côté, 2014. "Provincial-Municipal Relations in Ontario: Approaching an Inflection Point," IMFG Papers 17, University of Toronto, Institute on Municipal Finance and Governance.
    3. Richard M. Bird, 2014. "Global Taxes and International Taxation: Mirage and Reality," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1429, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Richard M. Bird, 2014. "A Better Local Business Tax: The BVT," IMFG Papers 18, University of Toronto, Institute on Municipal Finance and Governance.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martinez-Vazquez, Jorge & McNab, Robert M., 2003. "Fiscal Decentralization and Economic Growth," World Development, Elsevier, vol. 31(9), pages 1597-1616, September.
    2. Whitney Buser, 2011. "The impact of fiscal decentralization on economics performance in high-income OECD nations: an institutional approach," Public Choice, Springer, vol. 149(1), pages 31-48, October.
    3. Smith, Heidi Jane M. & Revell, Keith D., 2016. "Micro-Incentives and Municipal Behavior: Political Decentralization and Fiscal Federalism in Argentina and Mexico," World Development, Elsevier, vol. 77(C), pages 231-248.
    4. Rocabado Mejía, Carlos, 2006. "La Asignación Tributaria en Bolivia," Documentos de trabajo 7/2006, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    5. repec:ebl:ecbull:v:30:y:2010:i:1:p:219-233 is not listed on IDEAS
    6. Wolfgang Kerber & Oliver Budzinski, "undated". "Towards a Differentiated Analysis of Competition of Competition Laws," German Working Papers in Law and Economics 2004-1-1090, Berkeley Electronic Press.
    7. Bruno S. Frey, 2001. "A Utopia? Government Without Territorial Monopoly," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(1), pages 162-175, March.
    8. Frey, Bruno S. & Eichenberger, Reiner, 1996. "FOCJ: Competitive governments for Europe," International Review of Law and Economics, Elsevier, vol. 16(3), pages 315-327, September.
    9. William M. Shobe & Dallas Burtraw, 2012. "Rethinking Environmental Federalism In A Warming World," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-33.
    10. M. Mar㈠& M. Sarcinelli, 1994. "The European Union: how to assign the functions of government," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 47(191), pages 341-377.
    11. Maxime Desmarais-Tremblay, 2014. "On the Definition of Public Goods. Assessing Richard A. Musgrave's contribution," Documents de travail du Centre d'Economie de la Sorbonne 14004, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    12. Leonzio Rizzo, 2006. "Le inefficienze della competizione fiscale: una rassegna dei principali modelli teorici," Economia politica, Società editrice il Mulino, issue 1, pages 89-120.
    13. Gong, Liutang & Zou, Heng-fu, 2002. "Optimal taxation and intergovernmental transfer in a dynamic model with multiple levels of government," Journal of Economic Dynamics and Control, Elsevier, vol. 26(12), pages 1975-2003, October.
    14. Ligia Alba Melo-Becerra, 2016. "Sub-national fiscal policy under cooperative and non-cooperative models," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 35(Especial ), pages 253-279, January.
    15. Bruno S. Frey, 2009. "A New Concept of European Federalism," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 3, London School of Economics / European Institute.
    16. Uchimura, Hiroko & Jütting, Johannes P., 2009. "Fiscal Decentralization, Chinese Style: Good for Health Outcomes?," World Development, Elsevier, vol. 37(12), pages 1926-1934, December.
    17. Steiner, Susan, 2005. "Decentralisation and Poverty Reduction: A Conceptual Framework for the Economic Impact," GIGA Working Papers 3, GIGA German Institute of Global and Area Studies.
    18. Jeong, Dong Wook & Lee, Ho Jun & Cho, Sung Kyung, 2017. "Education decentralization, school resources, and student outcomes in Korea," International Journal of Educational Development, Elsevier, vol. 53(C), pages 12-27.
    19. Davis, Matthew & Ferreira, Fernando, 2022. "Housing disease and public school finances," Economics of Education Review, Elsevier, vol. 88(C).
    20. Paolo Liberati, 2011. "‘‘Which Tax’’ or ‘‘Which Tax for What?’’: Tax Assignment in the Theory of Fiscal Federalism," Public Finance Review, , vol. 39(3), pages 365-392, May.
    21. Sharma, Chanchal Kumar, 2004. "Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes," MPRA Paper 204, University Library of Munich, Germany, revised Nov 2005.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ays:ispwps:paper1323. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Paul Benson (email available below). General contact details of provider: https://edirc.repec.org/data/ispgsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.