Taxes, Fiscal Decentralisation and Social Cohesion in Peru

Project Team:
Christian von Haldenwang

Elke Büsing
Katharina Földi
Tabea Goldboom
Ferdinand Jenrich
Jens Pulkowski

Time frame:
2007 - 2008 / completed

Co-operation Partner:

Ministerio de Economía y Finanzas, MEF (Peru)
Asociación de los Servicios de Administración Tributaria, ASAT (Peru)

Project description

Research Question:
One glance at the Latin-American tax system shows that the region has very strong deficiencies in collecting taxes directly. On average less than five percent of GDP flows to the state in this way. In the OECD it is 15 percent. But not as severe are the differences in corporate taxes. More severely is the limited capacity of the states to collect taxes for private income and property, especially real estate. To the point: the wealthy part of the population of Latin America withdraws from their responsibility to pay taxes and on the other hand benefit from state services enormously. Peru takes the middle position in the universe of Latin-American countries. Since July 2006 the government of Peru
under President Alan García has placed the topic of tax equality by strengthening social cohesion as a high priority on the political agenda.
In this context, the discussion to what extent local authorities in the public finance can be strengthened. An important conceptual approach for this is developing semi-autonomous local tax agents, the so called Servicios de Administración Tributaria (SAT). These are service centers which are assigned by the communal governments but independent from them, to administer the local tax collection and receive a quota share of the revenue.

The country working group addresses the question, to what extend the instrument of semi-autonomous local tax agencies can contribute to a higher efficiency in tax revenue, tax equality and social cohesion. The research design relies on current research debate about fiscal decentralization. This debate sees an advantage to decentralizing tax collection, especially gaining efficiency based on the economies of scope. It also sees the advantage of considering a more local preference system on the basis of the principles of fiscal equivalency. And it also sees that stronger orientation toward public policies aiming for the general well being to be more beneficial because of competitive principles. However, these advantages might face scale advantages as well as possibly a higher equality as with a centralized tax collection system.

The present project was carried out by a research team of the German Development Institute (DIE) within the framework of the DIE’s 2007/2008 postgraduate training course.


Relevant publications:
von Haldenwang, Christian / Elke Büsing / Katharina Földi / Tabea Goldboom / Ferdinand Jenrich /Jens Pulkowski (2009): Administracion tributaria municipal en el contexto del proceso de descentralizacion en el Peru, Studies 44
von Haldenwang, Christian / Elke Büsing / Katharina Földi / Tabea Goldboom / Ferdinand Jenrich / Jens Pulkowski (2008): Kommunale Steuerverwaltung im Kontext des peruanischen Dezentralisierungsprozesses, Studies 42