Sources of Revenue and Government Performance: Evidence from Colombia

50 Pages Posted: 17 Nov 2018 Last revised: 30 Oct 2020

See all articles by Luis R. Martinez

Luis R. Martinez

University of Chicago - Harris School of Public Policy

Date Written: September 26, 2019

Abstract

I study whether governments financed through taxes are better governed than those relying on non-tax revenue. Focusing on Colombian municipalities, I leverage variation in property tax revenue and natural resource royalties arising from cadastral updates and fluctuations in the world price of oil. Additional tax revenue has a larger effect than a same-sized increase to oil royalties on local public goods in the areas of education, health and water, despite earmarking of royalties for this purpose. Higher tax revenue also reduces the probability of a disciplinary prosecution against the municipal mayor, while the opposite is true for royalties.

Keywords: taxation, accountability, governance, natural resource curse, public goods, corruption

JEL Classification: D73, H71, H75, Q32

Suggested Citation

Martinez, Luis, Sources of Revenue and Government Performance: Evidence from Colombia (September 26, 2019). Available at SSRN: https://ssrn.com/abstract=3273001 or http://dx.doi.org/10.2139/ssrn.3273001

Luis Martinez (Contact Author)

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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