Decentralization and local public finance in Tunisia

Abstract

AbstractThe Tunisian government has long admitted that its excessively centralized administrative and political systems have generated heavy costs in terms of inefficiency and citizen alienation. A major decentralizing reform effort was launched in the mid‐1970s, the most important parts of which dealt with changes in local taxation powers, and in the sources and size of grants and loans which Tunisian communes receive from national sources. The result to date has been a modest increase in communal revenues from the new or increased taxes, and a more significant increase in central government grants to local governments. Smaller and more rural communes are heavily dependent on grants to undertake development actions, their tax base being negligible. The revised systefn generates more revenue, and distributes resources more equitably, than the previous arrangements. In theory, it gives a greatly increased latitude to elected communal councils. Nonetheless, the local governments‐and the communes in particular‐remain severely constrained by central government authorities. The conclusion is that the decentralization reform has been partial and halting, and will in all probability continue in the same manner.