A meeting of tax administrators from more than 95 countries throughout the world has been discussing the distribution of taxing powers between different levels of government. The global conference of the International Tax Dialogue in Marrakech, Morocco has considered the method of allocating taxing powers to ensure accountability, efficiency and stability of the economy. Effectively they are asking the question of which authority should tax which income or property within a country.

The distribution of taxing powers must make the maximum use of experience and resources of each level of government. This can achieve a level of financial integration between the central government and local levels that can achieve efficient government leading to economic development. This is also true of the fiscal relations across a group of closely related countries. The benefits of fiscal decentralization in terms of empowerment of the local citizens and the accountability of the bodies administering taxation can lead to greater fairness and stability in a country or region.

Other important aspects of the issue include regional coordination of tax policies and a strong framework for tax sharing between the center and regions. A higher share of taxing powers to local government combined with a reduction of grants from central government can lead to a strong foundation for economic development.

At the same time as this conference the OECD’s Network on Fiscal Relations across Levels of Government has published a document entitled Fiscal Federalism 2014. This looks at the tax and policy options that can form the basis for government tax policy.

The partners in the International Tax dialogue are the International Monetary Fund (IMF), OECD, World Bank, and Inter-American Center of Tax Administrations (CIAT), European Commission and International Development Bank (IDB).