Municipal collection in the southern regions of Peru: empirical evidence on fiscal laziness

Paredes R.P.; Sucari H.; Ruelas-Choquemamani M.; Benique Olivera E.; Aguilar Olivera M.; Aroquipa Velasquez A.D.; Huamani Peralta A.; Sucari W.; Espinoza J.; Núñez C. · Frontiers in Political Science (2026) · DOI: 10.3389/fpos.2026.1780237

Resumen

Transfers derived from the exploitation of natural resources occupy a central place in the literature on subnational public finance. In resource-rich regions, transfers of mining royalties and other fees often constitute a significant source of funding for local governments, which can lead to fiscal dependency and weaken incentives to strengthen local revenue collection. This phenomenon, known as fiscal laziness, suggests that an abundance of external revenues may discourage the development of sustainable local fiscal capacities. In this context, this study analyzes the effects of mining royalty transfers on municipal tax collection in the southern macro-region of Peru between 2010 and 2019. Using dynamic panel data models estimated via the two-stage System GMM method for a sample of 355 municipalities, the research assesses whether transfers from extractive activities generate substitution effects on the mobilization of own-source revenue. The results show high persistence in municipal tax revenue and indicate that transfers from mining royalties and fees have a negative and statistically significant effect on local tax revenue, with a substitution elasticity of −0.151, supporting the fiscal laziness hypothesis. Likewise, transfers from the Municipal Compensation Fund also reduce municipal tax effort, suggesting that intergovernmental transfers can weaken local fiscal incentives when they are not accompanied by adequate accountability mechanisms. The heterogeneity analysis reveals that the substitution effect is more pronounced in municipalities receiving higher levels of mining transfers and in those directly linked to extractive activities, while the effect is not significant in non-mining municipalities. Additionally, variables such as population size and educational level have positive effects on local tax revenue, reflecting the importance of administrative capacity, human capital, and economic dynamism in strengthening municipal fiscal performance. Copyright

Instituciones: Universidad Nacional del Altiplano