Workshop Summary

1
Workshop Summary

• Innovations in Local Revenue Mobilization
• World Bank Workshop Sponsored by the
• Tax Policy and Administration and
  Decentralization Thematic Groups,
• World Bank Institute and Lincoln Institute of
  Land Policy
• 23-24 June 2003

2
Rationale for Local Revenue Mobilization?

• Increasing local level independence or autonomy
• Increasing accountability and transparency of
  government to the citizens
• Efficiency of decisionmaking
• Differences in local tastes and preferences
• Creates ownershiplinked to payment.
• Allows for innovation on part of local government
• Cash flow management
• Importance of strategic sequencing for
  sustainability

3
Property Tax Design Considerations?

• Intergovernmental fiscal system framework
• Need to understand the context (shortcoming and
  strengths) to effectively design reform.
• Mobilize stakeholder acceptance and support
  through improved taxpayer service, reducing
  compliance costs, etc. And communication
  strategy
• Incremental and strategic reform implementation.
• Taxpayer acceptance and affordability (link base
  and rate)
• Design considerations on tax base definitions,
  valuation definitions (capital vs rental), tax
  rate structure. Revenue potential and
  administration costs tradeoffs.
• Setting up oversight and quality control
  framework, and a strong appeal system.
• Capacity development issues
• Property tax non-tax considerations
• Legal design considerationsbut need for a firm
  legal basis.
• Long term sustainable plan for keeping values up
  to date.
• Need for effective collection and enforcement is
  critical
• Possible use of revenue neutral strategy in
  initial stagesespecially if one can broaden the
  tax base coverage
• Issues of tax relief/mitigation

4
User Charge Design Considerations?

• Identify appropriate services for charges.
• Design considerations level of cost recovery,
  offsetting externalities equity issues (both
  vertical and horizontal), administration issues
• Enforcement issues
• Elasticity considerations for specific services

5
Business Tax Design Considerations?

• Administration simplicity
• Interjurisdictional tax competition (race to the
  bottom)
• Assessment approaches (presumptive versus record
  based approach)
• Mobilize business community for support
• Linkage of revenue and regulatory functions
• Tax base and possible exemptions
• Linkages with national level taxation
• Overall administration strategywith compliance,
  enforcement.

6
Tax Administration Design Considerations?

• Joint and cooperative administration
  issuesexchange of information
• Consider innovative optionstailored to local
  situation.
• Minimize administrative and compliance costs
• Tradeoffs between central and local
  administration by tax type and functions
• Need for accountable and transparent
  administration