Sub-National Revenue Mobilization in Latin American and Caribbean Countries: The Case of Argentina

Abstract

This paper analyzes sub-national revenues in Argentina. Following a discussion of the recent evolution of government revenues and their vertical imbalance, the paper then analyzes the most important taxes collected by federal, provincial and local governments. Subsequently considered are the determinants of sub-national revenues and the impact of the 2001-2002 crisis. It is found that automatic transfers improve collections of the cascade sales tax and the property tax by enlarging the disposable income of the private and public sector of the provinces favored by the regional redistribution of income, while discretionary transfers reduce own-source revenue effort and encourage public investment. The paper concludes by analyzing options to improve sub-national revenue mobilization and offering specific proposals, particularly in regard to improving the cascade provincial sales tax.