Americas \ Local government finance
Resourcing local government remains a central challenge to effective decentralisation. This section has content relating to different models of fiscal decentralisation, options for identifying new sources of local revenue, such as local property tax; and strategies for improving collection and deployment of own-source revenue. It also offers information about improving the borrowing potential of local government, innovative financing models such as municipal bonds, shared services, and public private partnerships.
- Fiscal decentralisation
- Financial management
- Innovative financing models
- Local/own-source revenue generation
- Financing infrastructure
- Public private partnership
- Green finance
- Property tax
Cities across Canada face an enormous infrastructure deficit. From 100-year-old water mains to transit systems in vital need of upgrading and expansion, Canadian infrastructure is widely recognized to be in dire straits. And while the majority of Canadians elected a new government that was prepared to run a deficit to fund infrastructure, these funds alone will not cover the investments needed. Local governments need to make significant financial investments, too, and must raise revenues through taxes, user fees, and possibly new revenue tools. But before they can take these actions, they have to build trust to convince their residents that new revenues are needed and will be spent wisely. What does it mean to build trust? This paper examines the notion of trust and how governments can build it using: • Good information: relevant data made accessible to citizens and attractively packaged to enhance transparency; • Good communications: good stories that are well told, with relevant information distributed through a variety of channels (using open government tools and techniques); • Good engagement: inclusive and meaningful opportunities for dialogue about policy decisions to build the continuum of trust (using a variety of mechanisms); • Credibility: building an effective track record and controlling costs (through better performance benchmarking and other approaches); • Earmarking of funds: creating a dedicated fund that clearly links revenues raised to specific expenditures, and regularly reporting on the progress of projects funded. This research shows that there are concrete and practical steps that cities can take to build fiscal trust – but there are no shortcuts. Trust-building is a long-term proposition that takes resources. Cities must invest the time and dedicate the resources to build trust through all of the steps outlined, and continue to do so as part of their regular activities.
Author: Dina Graser and Pamela Robinson Publisher: http://munkschool.utoronto.ca/imfg/imfg-perspectives-paper-how-can-local-governments-build-public-trust/ Publication year: 2016
Pages 135-136 are on property tax. 'Another form of recurrent taxation that can be tapped for further resources in most developing countries is immovable property taxes. These taxes do not distort labor markets, human capital accumulation, or innovation decisions. Property taxes also provide a stable source of revenue that is less susceptible to short-term economic fluctuations and is difficult to evade. And although property taxes would likely not flow into federal social protection schemes (they are typically raised by local governments), they could fund regional or municipal social services or reduce the level of federal transfers to local governments. On average, high-income countries raise 1.1 percent of GDP from immovable property taxes. In middle income countries, these taxes yield about 0.4 percent of GDP.19 Yet property taxes represent untapped revenue potential for all countries. This revenue gap is estimated to be 0.9 percent of GDP in middle-income countries and as much as 2.9 percent in high-income countries.20 Governments in Sub-Saharan Africa are estimated to be missing out on revenues of 0.5 to 1 percent of GDP because of no property taxes whatsoever or their limited application.'
Author: World Bank Publisher: World Bank Publication year: 2018
Cities are assets, solutions and drivers of economic and social development. Cities possess huge untapped economic potential that can and should be leveraged to create wealth and economic opportunities for all. This requires good urban planning that supports urban compactness, integration, and connectivity. However, even the best urban plans risk ending up unused if they are not accompanied by financial and regulatory strategies for implementation. Strategic public investments must go hand in hand with strategic funding mechanisms and supporting governance systems. The report also identifies successful governance mechanisms for efficient and equitable provision of public services in metropolitan areas of developing countries, and shares experiences and methods to making public service provision more viable in peri-urban areas of large cities and in smaller urban centres of these countries.
Author: UN Habitat Publisher: UN Habitat Publication year: 2017
How can it be that people who should have the most fulfilling jobs in the world are generally far less engaged and productive than those we encounter in the private sector? The root causes, we believe, are organizational cultures that are strangled by rules. Myriad rules define the public-sector workplace—rules spelling out procedural red tape, layers of decision making, regulatory compliance, and employee safeguards. These rules are put in place for the best of reasons, such as to ensure fair hiring practices and prevent corruption, favoritism, and the influence of special interests. But as rules proliferate, they often congeal into inefficient, costly bureaucracies that slow decision making, stifle initiative, discourage cooperation, and frustrate employees.
Author: Jason LaBresh, Mark Watters, and Sachpreet Chandhoke Publisher: BCG Perspectives Publication year: 2017
This book offers insights and lessons that help us understand when the answer is “Yes”, and when it is “No”. It shows us how decentralisation can be designed to drive development forward, and focuses attention on how institutional incentives can be created for governments to improve public sector performance and strengthen economies in ways that enhance citizen well-being. It also draws attention to the political motives behind decentralisation reforms and how these shape the institutions that result. The book's purpose is to marry policy makers’ detailed knowledge and insights about real reform processes with academics’ conceptual clarity and analytical rigor. This synthesis naturally shifts the analysis towards deeper questions of decentralization, stability and the strength of the State. The book explores these in Part 1, with deep studies of the effects of reform on state capacity, political and fiscal stability, and democratic inclusiveness in Bolivia, Pakistan, India, and Latin America more broadly. These complex questions—crucially important to policy makers but difficult to address with statistics—yield before a multipronged attack of quantitative and qualitative evidence combined with deep practitioner insight. How should reformers design decentralisation? Part 2 examines these issues with evidence from four decades of reform in developing and developed countries. What happens after reform is implemented? Decentralization and Local Service Provision turns to decentralization’s effects on health and education services, anti-poverty programs, etc. with original evidence from twelve countries across Africa, Asia, and Latin America.
Author: Jean-Paul Faguet and Caroline Pöschl Publisher: Oxford University Press Publication year: 2017