Choosing between Centralized and Decentralized Models of Tax Administration

Abstract

The fundamental questions addressed in this article are the following: what is the most appropriate approach to organizing the vertical structure of tax administration, and what are the determinant factors that may make an approach more or less optimal in any particular country? Both centralized and multi-level tax administration have certain advantages and disadvantages. However, given the general approach to fiscal decentralization in a country and, more in particular, assignment of taxes and other revenue sources to different levels of government, it is possible to identify better and worse approaches to organizing tax administration.