The General Structure of Fiscal Decentralization in Four African Countries
The exact structure of fiscal decentralization depends on the functions that have been assigned to each tier of government. According to Burki, Perry and Dillinger (1999), different sources of revenue have different effects on behavior and different patterns of incidence. For instance, user charges impose direct costs on individual consumers and cause (through price effect) a rationing of consumption. Hence, an argument can be made for assigning user charges to finance services whose benefits are confined largely to individual consumers (P 27). Such services may include water supply and transportation. Furthermore, there are some forms of direct taxation that are appropriate for financing services whose benefits cannot be confined to individual consumers but do not extend beyond the boundaries of individual subnational jurisdictions (P 27).
the degree of discretion devolved to subnational governments to make decisions on fiscal issues, including overall policy to be pursued, the amount of revenue to be raised, and the allocation of available resources. [The process is successful therefore if] subnational governments have the power, given to them by the constitution or particular laws, to raise (some) taxes and carry out spending activities within clearly established legal criteria. (Tanzi, 1996, 297, ref. in Abedian and Biggs, 1998, 59).
KeywordsLocal Government Central Government Fiscal Decentralization Location Quotient Revenue Collection
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