HAAWBANKAAACurrent-draft-July二零一六.doc.docVIP

H:\AAWBANK\AAACurrent-draft-July2003.doc International Experiences with Administration of Local Taxes: A Review of Practices and Issues John L. Mikesell Professor of Public Finance and Policy Analysis School of Public and Environmental Affairs Indiana University Bloomington, Indiana  1. Introduction Many countries, including but not limited to those in the group of developing and transition nations, have concentrated taxing authority and tax administration with the central government. However, there is a spreading sense that local governments throughout the world are growing up (Bahl, 1999), that they no longer require central government guidance and control for them to make a positive contribution to provision and delivery of government services, that they can and should assume more responsibility for finance of those services, and that bringing decisions closer to the people, the voters, will improve government efficiency, effectiveness, and responsiveness. An important element in the case for subnational revenue-raising responsibility is the idea that governments should face at least part of the political consequences of obtaining resources to provide services. As nations give local and regional governments significant authority to levy taxes and responsibility to finance independently a greater share of the cost of the services they provide, there are two significant lessons from international experience that they should keep in mind. First, international experience clearly demonstrates that taxes need not be administered by the government that levies them. Giving subnational governments meaningful authority to tax gives them power to adjust the size of their budgets and to establish how the tax burden from financing that budget will be distributed. It may be argued that giving localities power to adjust the rate of a tax yielding them revenue provides sufficient fiscal autonomy. However, given the choice, some subnational governments will administer the