Provincial Economy and Local Fiscal Disparity

Authors

  • Direk Patmasiriwat Graduate School of Development Economics, National Institute of Development Administration, Bangkok 10240
  • Pichit Ratchatapibhunphob The Faculty of Liberal Arts, Rajapruk University, Nonthaburi 11130

DOI:

https://doi.org/10.14456/psruhss.2022.32

Keywords:

Local fiscal revenue, Own revenue, Shared taxes, Grant, Gini Index

Abstract

This article reports an empirical analysis with highlight on relationship between provincial economy and local fiscal revenue. Specifically the regression model is performed to test of the relationship between local fiscal revenue and Gross Provincial Product (GPP), elasticity or responsiveness, and fiscal inequality between groups and within-groups. Findings are summarized as follows: (1) local own revenue and shared taxes are positively related to GPP (2) grant allocation is inversely related to GPP, implying that the government had deliberately intended to reduce an area-based inequality. (3) Local own revenue accounted for 7% of total revenue, whereas the shared taxes 40-50%, and the grant 40-50%.  (4) The Gini Index and the Lorenz curve indicate degree of fiscal inequality. (5) A decomposition technique reveals that 57% of inequality is due to regional variations and the rest within regions. (6) Discussion on role of equalization grant and the simulated grant allocation is performed on condition of the grant amount the same, yet, more effectiveness with respect to inequality reduction.

References

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Published

30-09-2022

How to Cite

Patmasiriwat, D. ., & Ratchatapibhunphob, P. . (2022). Provincial Economy and Local Fiscal Disparity. Humanities and Social Sciences Journal of Pibulsongkram Rajabhat University, 16(2), 415–427. https://doi.org/10.14456/psruhss.2022.32

Issue

Vol. 16 No. 2 (2022): July - December

Section

Research Article

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