Does Decentralised Local Tax Administration Warrant Re-Examination?
Keywords:
Local Taxes, Profession Tax, Decentralisation of Tax AdministraionAbstract
The higher-level government’s degree of control over the subnational government administration is frequently a topic for discussion among academics and policymakers. Generally, local taxes are designed poorly and in a presumptive way, and “administered with low coverage rates, arbitrary assessments, and large delinquent lists” (Bird, 2015, p. 18). Increases in incidences of tax evasion and compliance costs are important arguments against the local administration of taxes. Recent theoretical and empirical studies argue for the existence of self-governing local governments, which requires an efficient local tax system to be in place. Using panchayat-level and municipal-level data, this paper investigates the efficiency of the local tax administration in Kerala, a state in India, and tries to estimate the amount of revenue that would be generated if the system were to be rationalised. It also addresses the question of whether local tax administration needs to be re-examined.
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