technical report

DP/WP

Text

OSIPP Discussion Paper. 2019, DP-2019-E-006, p. 1-20

Delegation of Taxation Authority and Multipolicy Commitment in a Decentralized Leadership Model

Osaka School of International Public Policy, Osaka University

English

Text

2019-05-08

http://www.osipp.osaka-u.ac.jp/archives/DP/2019/DP2019E006.pdf

This paper examines to what extent taxation authority should be delegated to local or lower-level government. Delegation of taxation authority can be regarded as a commitment to the local tax rate ex ante in a decentralized leadership model, in which local governments set policies ex ante and the central government decides transfer policies ex post. Previous papers point out that the ex post interregional transfers of the central government distort the ex ante regional policies of local governments. However, Silva (2014, 2015) clarify the case where efficient expenditure by local governments is achieved. This paper examines the delegation of taxation authority by extending Silva'smodel to include commitment to taxation and generally derives the conditions when efficient public expenditure by local governments can be achieved in relation to the delegation of taxation authority. The model adopted in this paper allows various levels of spillovers of local public goods and various types of multipolicy commitments of taxation and/or expenditure.

72157

Delegation of Taxation Authority and Multipolicy Commitment in a Decentralized Leadership Model

Osaka School of International Public Policy, Osaka University

English

2019-05-08

OSIPP Discussion Paper

DP-2019-E-006

1

20

https://hdl.handle.net/11094/72157

http://www.osipp.osaka-u.ac.jp/archives/DP/2019/DP2019E006.pdf