Abstract * This paper address options for restructuring the revenue system of Bolivia’s subnational governments, particularly prefectures, emphasizing reduction of dependence on natural resources and strengthening of subnational tax autonomy. The paper additionally identifies tax instruments or tax bases that could be assigned exclusively to regional governments or shared with the central government, assessing their main advantages and disadvantages through a simulation of revenue generation. The results show that several options exist for increasing the tax autonomy of local governments. The tax instruments proposed in this paper carry relatively low administrative costs. In fact, the taxes proposed would not require the establishment of new agencies but could be collected by existing agencies and, in the case of energy and fuel taxes, by producing and distributing firms. JEL Classification: H21, H23, H24, H25, H26, H71 Keywords: Tax reform, Tax autonomy, Subnational governments, Prefectures, municipalities
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This paper was undertaken as part of the Latin American and Caribbean Research Network project “Sub-national Revenue Mobilization in Latin American and Caribbean Countries.” The authors wish to thank Roberto Zanola for assistance with estimates. Roberto Zanola for estimates, for the Project on Subnational Revenue Mobilization in Latin America and the Caribbean countries, sponsored by the Inter-American Development Bank.
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