Land, Not Cascades: Replacing Bolivia's Transaction Tax with a Progressive Land Value Tax under Fiscal Decentralization
RICARDO ALONZO FERNANDEZ SALGUERO
This article evaluates three policies that are often discussed as though they were interchangeable: redistributing Bolivia’s Impuesto a las Transacciones (IT) under a 50/50 rule, abolishing the IT, and replacing it with a progressive land value tax (LVT). They are not equivalent. The first changes the territorial destination of an existing cash flow; the second removes approximately Bs 6,047.7 million of annual cash revenue before behavioral feedbacks; the third changes the tax base, the tax authority, the incidence pattern, and the architecture of fiscal federalism. The analysis combines harmonized fiscal series, the 2024 population census, a weighted synthetic parcel and rural-holding database, a heterogeneous-agent model, global Sobol sensitivity analysis, Bayesian Markov-chain simulation with path dependence, machine-learning ensembles, and a stock-flow consistent block. Results are conditional policy experiments rather than causal estimates of a reform that has not yet occurred. The central finding is that a progressive LVT is a superior long-run tax base to a cascading gross-receipts tax, but immediate full substitution is not credible under current cadastral and collection capacity. A contingent transition with an urban-first LVT, selective rural extension, liquidity protection, equalization, and a temporary residual IT dominates both abrupt abolition and a permanent 50/50 IT arrangement. Santa Cruz gains immediately from IT coparticipation, yet its modeled long-run interest is stronger under a mature LVT provided that the department accepts equalization and finances the administrative transition.