Business associations and local taxation in Southeast Asia

Abstract:

At their best, decentralizing reforms make government more accountable to citizens and empower local governments to invest in their own development. Yet, successful decentralization requires that local governments raise at least some revenue to finance new service delivery responsibilities, and the capacity of local governments to generate tax revenue varies. This variation is evident in the Philippines, where capacity to tax varies greatly across cities despite uniform tax powers. I argue that business associations contribute to this variation by endorsing tax increases to enable cities to spend on infrastructure, but only if they can sustain distributional consensus and forestall local officials from diverting revenues away from business-friendly projects. I present a controlled comparison of two cities, Iloilo and Batangas, to show that business associations resolve distributional conflict by dispersing benefits across members, and monitor public spending by participating in legislative hearings and jointly managing public projects.

 

Speaker Bio:

I am a postdoctoral fellow at the Center on Democracy, Development, and the Rule of Law at Stanford University. My research explores the developmental implications of public-private linkages in decentralizing, developing countries, especially in Southeast Asia. I received a PhD in political science at Emory University and an MA in Southeast Asian studies from National University of Singapore.