Central America Urbanization Review: Making Cities Work for Central America by Augustin Maria Jose Luis Acero Ana I. Aguilera & Marisa Garcia Lozano

Author:Augustin Maria, Jose Luis Acero, Ana I. Aguilera & Marisa Garcia Lozano
Language: eng
Format: epub

Big cities should generally have more fiscal autonomy, and finance should follow function.8 Certain characteristics of large cities and agglomerations have implications for metropolitan public finance. For example, high population density could in some cases reduce the per capita cost of service provision due to economies of scale, but large cities also concentrate a larger number of problems (for example, congestion and pollution) and expenditure needs (for example, public transport and sanitation). Accordingly, large cities and metropolitan areas generally have higher expenditures per capita than smaller municipalities. Local governments usually also have stronger human resource capacity, and greater ability to raise revenues (through taxes and fees). Therefore, they should generally have more fiscal autonomy than other areas, such as in the application of user charges, property taxes, local income and/or business taxes, and fuel taxes, among others. Such policies would be applicable to the capital municipalities of all the Central American countries, in particular when new responsibilities are assigned to them.

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