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The role of direct taxes in fiscal decentralization

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  • Luca Gandullia

    (University of Genoa, Italy)

Abstract

The aim of the paper is to review the economic theory of tax assignment across levels of government and the international experience in the use of direct taxes – personal income taxes and taxes on profits and on business value added – for fiscal decentralization. We highlight that as for other options of local taxation there are merits but also drawbacks in the use of direct taxes as a source of financing for sub-central governments and so the final choice about their use or not is a matter of judgment and depends on the political priority to be attached to different objectives, such as efficiency, equity, accountability, tax competition, administrative feasibility and revenue adequacy.

Suggested Citation

  • Luca Gandullia, 2012. "The role of direct taxes in fiscal decentralization," DEP - series of economic working papers 6/2012, University of Genoa, Research Doctorate in Public Economics.
    • Handle: RePEc:gea:wpaper:6/2012
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    File URL: http://www.dep.unige.it/RePEc/gea/wpaper/dwpo-6-sep2012.pdf
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    References listed on IDEAS

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    Cited by:

    1. Olha Dmytryk & Oksana Makukh, 2020. "Economic Principles Of Taxation: Problems Of Definition And Embodiment In The Tax Legislation Of Ukraine And The European States," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 6(2).
    2. Mare, Mauro, 2015. "Why and How should the EU budget be reformed?," MPRA Paper 76112, University Library of Munich, Germany.
    3. Richard M. Bird, 2013. "Below the Salt: Decentralizing Value-Added Taxes," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1302, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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    More about this item

    Keywords

    direct taxes; fiscal decentralization; tax assignment;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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