Foreign Investment Advisory Service - Workshop: Raising Taxes through Regulation?

Workshop: Raising Taxes through Regulation?

Use and misuse of regulatory fees to raise local revenue

Introduction
On February 25, 2009, the Investment Climate Department (CIC) of the World Bank Group organized a Workshop on Local Taxes and Regulation. The workshop was a joint initiative of the Business Operation and Business Taxation teams, gathering a wide range of expertise on tax policy and administration, business regulation, and decentralization. Participants consisted in practitioners implementing reforms in all regions, coming from various institutions such as the World Bank, IFC, the IMF, USAID, and the Urban Institute among others.

The workshop was motivated by inter-related problems faced by practitioners in the areas of regulatory reform (e.g. licenses, permits and inspections) and business tax reform, usually (but not always) at the sub-national level of government:

On the one hand, the desire to improve the investment climate leads to recommend the rationalization/streamlining of regulatory regimes, as well as the potential elimination of "regulatory fees", when they are excessive or unjustified;
On the other hand, many local governments (e.g. municipal and provincial administrations) in developing and transition countries depend on the revenues from "regulatory fees "for a significant portion of their budgets.

If local government should not rely on excessive/unjustified regulatory instruments for revenue purposes, then how can these instruments be replaced?

Key questions addressed:	Presentation by:
1. What are appropriate revenue instruments for local taxation?	Prof. Richard Bird Prof. Roy Bahl
2. How to appropriately set regulatory fees?	Dr. Stephen Rimmer
3. How is the twin problem of local tax and regulatory reform currently addressed in practice?	Matt Glasser [Tanzania] Lars Grava [Kenya] Steven Rozner [Moldova & BiH] Laurent Corthay [Yemen]
5. What is the appropriate sequence between regulatory reform and local tax reform?	Q&A session [see forthcoming publication]
6. How can the WBG help client countries build the capacity to solve the twin problems of local tax and regulatory reform?	Q&A session [see forthcoming publication]