Financing of municipal current expenditure through local taxes: a systematic review

Authors

  • Henry Bernardo Garay Canales Academic Department of Accounting, Faculty of Economics Department, Universidad Nacional de Tumbes, Tumbes, Tumbes 24001, Perú;
  • Julio Mayorga Challco Academic Department of Mathematics and Statistics, Faculty of Chemical, Physical and Mathematical Sciences, Universidad Nacional de San Antonio Abad del Cusco, Cusco, Cusco 08003, Perú;
  • Wilson Eduardo Vargas Cubas Academic Professional School of Economics, Faculty of Economics, Accounting and Administrative Sciences, Universidad Nacional de Cajamarca, Cajamarca, Cajamarca 06003, Perú;
  • Fredy Roger Flores Flores Accounting and Finance, Faculty of Accounting and Finance, Universidad Nacional Amazónica de Madre de Dios, Puerto Maldonado, Puerto Maldonado 17001, Perú.

DOI:

https://doi.org/10.48161/qaj.v4n4a985

Abstract

This study examines key factors influencing the financing of municipal current expenditure through local taxes, emphasizing the importance of strengthening local tax resources to enhance municipal fiscal autonomy. A systematic literature review was conducted using Scopus and Web of Science databases, focusing on keywords such as financing, municipal current expenditure, and local taxes. The review included 19 articles in Spanish and English published between 2014-2022. Findings indicate that local tax autonomy, diversified tax structures, economic cycles, tax culture, effective enforcement, and local political commitment significantly affect municipalities' self-financing capacity. Property taxes and intergovernmental tax coordination also play crucial roles. The interplay of strategic, institutional, and contextual elements determines local governments' ability to finance expenditures and investments through self-administered taxes. Evidence suggests that municipalities effectively harmonizing these variables may reduce their dependence on discretionary central transfers, gaining autonomy in defining budgetary priorities according to local needs. The study provides a foundation for comprehensive municipal tax reforms aimed at increasing local fiscal independence. Finally, the study's findings offer practical guidance for implementing comprehensive municipal tax reforms, potentially leading to enhanced fiscal autonomy and more sustainable local government financing.

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Published

2024-10-17

How to Cite

Garay Canales, H. B., Mayorga Challco , J., Vargas Cubas , W. E., & Flores Flores , F. R. (2024). Financing of municipal current expenditure through local taxes: a systematic review. Qubahan Academic Journal, 4(4), 26–38. https://doi.org/10.48161/qaj.v4n4a985

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Articles