The process of fiscal decentralization, as a typical feature of contemporary societies, implies the transfer of public functions and public revenues from higher to lower levels of authorities in order to ensure the financing of the transferred functions. The trend of fiscal decentralization has created the increased need for own revenues of local self-government units. The rates of these revenues are determined by local authorities, either independently or in line with the statutory limits. In the Republic of Serbia, own revenues of local self-government unit include different local public utility fees. In this paper, the authors deal with the financial autonomy of local self-government units observed through the lens of local public utility fees, (i.e. their yields), whereby the research will be limited only to the local self-government units in the territory of Autonomous Province of Vojvodina. The authors will also attempt to determine the factors that affect the rates and abundance of these revenues of local self-government units.
Fiscal decentralization is the transfer of responsibility between the provision of public services and sources of financing by the central government to lower levels of government, with the outcome depending on how the process itself is devised and implemented. Proper and balanced implementation of fiscal decentralization leads to economic growth, achieving economic goals that can bring economic benefits. In addition to economic benefits, decentralization could lead to greater accountability, transparency, and citizen engagement, which would also improve the level of democracy in society. Since 2002, the Republic of Croatia has secured a significant amount of financial resources through the system of tax revenue sharing and aid allocation, which has significantly improved the fiscal capacity of all local units. The impact of fiscal decentralization in the Republic of Croatia on economic growth was tested using a panel analysis. From the results obtained, there is a significant positive relationship between fiscal decentralization and economic activity, and based on the results obtained, it can be concluded that fiscal decentralization in the Republic of Croatia had a positive impact on economic growth. This also confirms the role of lower levels of government established to improve the quality of life of citizens by deciding on the provision of local public services close to where they are provided and close to the users, providing better education, social and health services and infrastructure, thus positively influencing economic growth. In further research, it is necessary to focus on the creation of a better system of financing lower levels of government and on the fiscal autonomy of local units in the Republic of Croatia, in order to make the impact of fiscal decentralization on economic growth even more evident and to have as much influence as possible on the even development of the Republic of Croatia.
This study emphasizes the implication of dynamic connection between digital currency and Nigerian economic growth rate by focusing attention on Bitcoin, Ethereum and Litecoin with respect to their returns and volatility from 2010Q4 to 2022Q3. As a way to have a robust estimation, we model our analysis using ARDL model and granger causality test. This model is rather useful to have both short and long run estimations. Importantly the study’s outcome conforms with the fundamentals. By findings from the study, the trend analysis suggests that the country’s exchange rate moves in line with digital currency activities while at the same time signifies some implication on the growth rate of the Nigerian economy. While lower returns for Bitcoin and Litecoin increase growth rate, the return for Ethereum rather move in the same direction as the growth rate. This indeed suggest that most Nigerians into digital currency activities often engage in portfolio diversification among available coins. The study further found that low volatility in the market will raise (significantly especially for Ethereum) growth rate of the economy while causal implication run from returns and volatilities of these coins to growth and exchange rates. Indeed, the findings have important policy implication for the Nigerian economy which suggests paying good attention to digital currency activities in the country and formulating necessary policies to improve it.
Carol Nalubanga, Edmand Bakashaba, Muhammad Sendagi
Background. Aim: To determine the relationship between municipal government revenue collection and service delivery in Rukungiri Municipality. Methodology A case study, descriptive, cross-sectional research design was used for this study. The study adopted both qualitative and quantitative approaches. A case study design was adopted because it enabled the researcher to carry out an in-depth investigation into the concepts under study. The entire population of Rukungiri Municipality is targeted in this research. Also, the municipality has 51 civil servants/technical staff, 20 political leaders (councilors) at municipal and Division levels, 20 taxpayers, 7 service providers, and 25 community projects’ beneficiaries. This is based on different stakeholders’ information relevance in their respective positions. Therefore, the population of the study was 1400 people. A sample of 302 respondents were selected Results One of the findings mentioned is the importance of local revenue in decentralized societies. While it’s true that local revenue plays a significant role in financing local government operations and service delivery, it is important to consider the capacity of local governments to effectively collect taxes. Many local governments in developing countries face challenges in revenue collection, including limited tax bases, weak tax administration capacity, and high levels of tax evasion and informality. Therefore, simply relying on local revenue may not be sufficient to meet the financing needs of local governments and ensure adequate service delivery. Conclusion The findings indicate that there was a positive and moderately strong relationship between revenue collection and service delivery (r = 0.719). This relationship implies that the municipality is using its collected revenue to fund its expenditures for service delivery. Recommendation Strengthen local revenue collection: Rukungiri Municipality should enhance its capacity to collect local taxes and fees efficiently. This can involve investing in modernizing revenue collection systems, training staff, and conducting public awareness campaigns to ensure compliance.
The main objective of this study was to evaluate the effect of decentralized tax policies on district development in Rwanda. The research was guided by the following specific objectives: to examine the effect of rental income tax policies on development of Rwamagana district, assess the effect of immovable property tax policies on development of Rwamagana district and identify the effect of trading license tax policies on development of Rwamagana district. This study used descriptive and analytical, whereas descriptive research also called statistical research the main goal of this type of research was to describe data and characteristics of what was being studied. Quantitative and qualitative data used to effect of decentralized tax policies on the development of district. The population of this study was 246 including tax collectors, District administration and Finance officers, Sector administration and Finance officers, Accountants, Ngali holdings staff and staff at cell level. Using Slovin's formula, researcher estimate how big of a sample they needed to get reliable findings. Each stratum has its own simple random sample selected 152 respondents from it, in a size that is proportionate to its result of the increasing number. The researcher gained the information from the primary data obtained through a questionnaire, interview and document review applied as to obtain secondary data. Descriptive statistics were used to obtain the frequencies and percentages, in addition inferential statistics, mainly the correlation model, Analysis of Variance to test the relationship among the variables (independent). The study used SPSS (Version 21) and Microsoft Excel to analyze the data. The model includes predictors such as Trading license tax policies, Immovable property policies, Rental income tax policies. The R value of 0.876 indicates a strong relationship between the predictors and the Development of Rwamagana District. The R Square value of 0.767 indicates that approximately 76.7% of the variability in the outcome variable can be explained by the predictors in the model. Overall, this model summary indicates a significant effect of the decentralized tax policies on the outcome variable Development of Rwamagana District Specifically, Rental income tax policies have a coefficient of (β= 0.473, t=7.499, p value=0.000), Immovable property policies have a coefficient of (β= 0.218, t=3.912, p value=0.000), and Trading license tax policies have a coefficient of (β= 0.354, t=5.959 p value=0.000). All these coefficients are statistically significant on Development of Rwamagana District, as indicated by their associated Sig. Values below 0.05. This highlighted the concrete effect of decentralized tax policies on Development of Rwamagana District. District should maintain transparency in tax collection and allocation of tax revenues. Publish regular reports and updates on how tax revenue is utilized for local development projects, enhancing trust among taxpayers. Key words: decentralized tax policies, district development, immovable property tax policies, rental income tax policies, trading license tax policies
Decentralization is meant to improve public services, but relatively few studies examine this question empirically. Poverty, inequality and social exclusion are deeply-rooted structural and historical phenomena in Kenya. Successive Kenyan governments have attempted fiscal decentralization as a way of ensuring the country achieves equitable development across the many regions. Fiscal decentralization consists primarily of devolving revenue sources and expenditure functions to lower tiers of government. By bringing the government closer to the people, fiscal decentralization is expected to boost public sector efficiency, as well as accountability and transparency in service delivery and policy-making. Decentralization also entails greater complexity in intergovernmental fiscal relations. Coordination failures in fiscal relations are likely to have a bearing on the fiscal positions, nationally and sub nationally. The purpose of this project was to find the factors that are detrimental to the management of the devolved funds in two levels of government. Increased local financing after fiscal decentralization has opposite two effects, that is, (1) the local finance derives incentive for effective management, and (2) it may induce the lack of public resource for managing public expenditure, which is particularly needed in the basics of managing the lower levels of government. This project analyzed the detrimental factors that affect management of fiscal funds by a county government. The objectives used by this study were; To establish the effects of corruption in the management of devolved funds in Nairobi City County, to determine the effect of accountability in the management of devolved funds in Nairobi City County, to determine the effect of financial regulations in the management of devolved funds in Nairobi City County and to establish the effects of adoption of IFMIS in the management of county funds in Nairobi City County. The study adopted a descriptive research design. From the findings, Accountability, Adoption of IFMIS, and Financial Regulations were found to have positive and significant effect on Financial Management while the effect of corruption was found to have a negative relationship with financial management. From the findings and conclusions therefore, this study recommended that Nairobi County Government consider Accountability, Adoption of IFMIS, and Financial Regulations as the key factors that could determine the management of devolved funds.
We exploit the public good attributes of Ganges water pollution cleanup and theoretically analyze an aggregate economy of two cities—Kanpur and Varanasi—through which the Ganges flows. Our specific objective is to study whether water pollution cleanup in these two cities ought to be provided in a centralized or in a decentralized manner. We first determine the efficient cleanup amounts that maximize the aggregate surplus from making the Ganges cleaner in the two cities. Second, we compute the optimal amount of water pollution cleanup in the two cities in a decentralized regime in which spending on cleanup is financed by a uniform tax on the city residents. Third, we ascertain the optimal amount of water pollution cleanup in the two cities in a centralized regime subject to equal provision of cleanup and cost sharing. Fourth, we show that if the two cities have the same preference for pollution cleanup, then centralization is preferable to decentralization as long as there is a spillover from pollution cleanup. Finally, we show that if the two cities have dissimilar preferences for pollution cleanup, then centralization is preferable to decentralization as long as the spillover exceeds a certain threshold.
Abstract Local democratization aims to improve the decentralized capacity of governance regimes to generate meaningful municipal spending geared towards realizing societal outcomes. In the late 1990s, following the Asian financial crisis, Indonesia initiated a significant institutional transition from centralistic and authoritarian rule towards decentralized and more democratic governance through the introduction of direct mayoral elections. Extant research analyzed the effects of the introduction of these elections on local public spending and local societal outcomes separately. This paper offers an integrated analysis of the impact of the introduction of direct mayoral elections on both local public spending and local societal outcomes in 456 Indonesian municipalities between 2002 and 2012. Analyses of growth models, using panel data on three domains (education, health, and infrastructure) provided by Indonesian Ministry of Finance, Indonesian Ministry of Home Affairs, and Statistics Indonesia, show that the introduction of direct mayoral elections in Indonesia resulted in an increased growth in educational expenditures. It also improved outcomes in health and infrastructure domains. However, the introduction of direct mayoral elections reversed a positive association between public spending and the attainment of societal outcomes or worsened a negative association between them. These results would support a view on local democratization in Indonesia asserting that the introduction of direct mayoral elections stimulated local clientelist practices rather than local accountability and policy responsiveness.
To achieve the goal of long-term stable poverty reduction, it is necessary to implement not only economic poverty reduction but also natural poverty reduction and formulate a green and sustainable economic growth pattern, and finance is an effective means to affect economic poverty reduction and natural poverty reduction. This paper innovatively calculates the natural poverty index of 1712 county administrative units in China based on BP neural network and combines relevant county data to investigate the impact of county fiscal decentralization on natural poverty and its transmission mechanism from 2000 to 2020 using a two-way fixed-effect model, which provides a new interpretation perspective for green economy patterns and sustainable development. The main research results are as follows: First, the increase in county-level financial autonomy in China significantly increases the level of regional natural poverty, which is still valid after a series of robustness tests using the instrumental variable method, replacing the response variables and processing with a one-stage lag. Secondly, heterogeneity analysis shows that, on the one hand, the positive impact of county-level fiscal decentralization on the natural poverty index is different in regions with different natural poverty formation mechanisms. On the other hand, the reform of “provincial direct management of counties” has significantly improved the natural poverty situation in counties, indicating that an extensive fiscal and taxation system in the early stages of economic development aggravates regional natural poverty and that optimized fiscal decentralization is conducive to the alleviation of natural poverty. Finally, the mechanism analysis found that the local income impact and expenditure preference accompanied by the fiscal decentralization of counties strengthened the race to the bottom of taxation, guided industrialization, hindered technological progress and led to the deterioration of regional natural poverty. This research claims that encouraging local governments to deepen and improve the fiscal decentralization system, implement the concept of green finance, improve the ecological protection compensation mechanism and market incentive system and implement differentiated mitigation plans for different natural poverty counties are the crucial factors to achieving natural poverty alleviation at the county level and improving regional ecological sustainability in the future.
In the mid-1990s I wrote the first English-language book on local government in Latin America (Nickson, 1995 ). At that time there were also very few works on the subject in Spanish or Portuguese. The tardy appearance of works on such a topic reflected the long history of centralization and the long-standing neglect of academic investigation of sub-national governance in the region. The information available was so limited that in the case of some countries (notably Argentina) it was even difficult to obtain an accurate figure on something as basic as the number of municipalities. The book covered the history of local government since the late colonial period, its legal status, its structure, local service provision, local finance, electoral system, administrative organization, citizen participation, and inter-municipal relations. It also provided descriptive profiles of municipal government in 18 countries in the region. Since then there has been an explosion of publications on local governance in the region, highlighting the transformation that has taken place in the wake of a major decentralization process than had begun a decade earlier. Several studies agree that a significant leap has been made in the level of decentralization in Latin America (Bossuyt, 2013 ; Carrera, 2013 ). This period of time is sufficient to assess the impact of this transformation.
Fiscal decentralization has recently gained popularity throughout the world. This study examines how revenue decentralization influences subnational budgetary balances and how it affects the general government debt in the OECD countries. We applied panel regression analysis to an annual panel dataset that includes data from 23 countries from 1990 to 2020. Then, we explore the relationship between fiscal/revenue autonomy and public finance debt thus budgetary balances at the SNG level. Our empirical findings suggest that higher levels of SNG budget discipline are associated with greater revenue autonomy. The findings also suggest that general governments should consider delegating greater fiscal autonomy to SNGs to achieve better fiscal outcomes, including lower levels of general government public debt. This information could be useful for policymakers who are looking to implement sustainable fiscal stewardship.
The subject of the study is modernization of budget relations based on horizontal decentralized connections. The relevance of the study is mitigation of the shortcomings and risks in 2023, especially the tax on excess profits of previous years. The goal of the study is to develop a fundamentally different scheme for financing a part of government spending on the principles of “uberization” that is mutually beneficial for the state and business. The objective of the study is to improve the mechanism of the one-time fee on large business (windfall tax). The research method is the analysis of business community opinions, foreign experience, results of research work of the Department of Public Finance and the Department of Taxation and Tax Administration of the Financial University. The basic principles of building a new decentralized electronic platform are described. Specific examples of federal budget expenditures that should be “uberized” in the first place are considered: federal subsidies for NPOs and financing of the “Krug Dobra” fund. The scientific novelty and practical significance of the proposed new mechanism for additional financing of public expenditures is direct connection of payers and recipients of budget subsidies on an electronic platform while preserving the control functions of the State. The conclusion is made about the practical applicability of the proposed new scheme of “uberization” of budgetary relations as a mechanism for collecting the one-time fee on large businesses (windfall tax), which can actually unload the federal budget, “liberating” it from part of expenses, without creating additional sanctions and other risks for participants.
Tatiana N. Litvinova, Olga А. Kochetkova, D. V. Kaverin
Introduction. The article analyses the features of the socio-economic development of the republics of the North Caucasian Federal District in the conditions of external challenges that our country has been facing over the past three years, including the consequences of the COVID-19 pandemic, as well as external sanctions pressure in 2022. The relevance of the study is due to the constant dependence of the budgets of the republics of the North Caucasian Federal District on revenues from the federal budget, tension in the labor market, and the need to improve the mechanisms of regional governance.Materials and methods. The concept of economic (budgetary federalism) developed by J. Stigler, W. Oates, L. Feld and F. Schneider serves as the theoretical and methodological basis of the study. Foreign theories of economic federalism offer two models of the budget process – decentralized and centralized. The Russian model of budgetary federalism, functioning as a centralized unitary state, was considered in the works of A. Avetisyan, I. Kharitonov, E. Mashchenko and many others. On the one hand, such a system makes it possible to accumulate federal budget funds for solving common problems. On the other hand, there are still regions with a strong economic dependence on gratuitous receipts from the budget of a higher level. This study is based on the analysis of socio-economic statistics and monitoring of regional media.Results. The Republics of the North Caucasian Federal District continue to demonstrate a high subsidized dependence of their budgets on gratuitous receipts from the federal budget. At the same time, in the post-pandemic period, there has been a slight growth in own budget revenues due to an increase of small and medium-sized businesses. Unemployment remains a serious systemic problem. The digitalization and the development of e-government play an important role in the optimization of management processes. During the pandemic, the number of citizens of the North Caucasian Federal District receiving public services in electronic form increased by 12%. The sanctions pressure after the start of the Special Military Operation in Ukraine did not have a significant impact on the economy of the republics of the North Caucasian Federal District due to their weak involvement in the international division of labor.Discussion and conclusion. The serious dependence of the budgets of the republics of the North Caucasian Federal District on subsidies from the federal center, on the one hand, makes the socio-economic situation in the republics free from external challenges. On the other hand, the entire burden of economic support and financing of the necessary social measures falls on the federal government, in particular, smoothing out inflationary risks for small businesses and families with children. The difference in the possibilities of regional budgets was also manifested in the provision of one-time financial assistance to the families of the mobilized. This again raises the need to increase the revenue side of regional budgets, due to the growth in the number of taxpaying enterprises.
Rafał Trzeciakowski, Piotr Ciżkowicz, Andrzej Rzońca
This dataset covers 2476-2479 Polish municipalities and cities (dependent on the year) over a period from 2004 when Poland joined the EU to the pre-COVID-19-pandemic 2019. The created 113 yearly panel variables include budgetary, electoral competitiveness, and European Union funded investment drive data. While the dataset has been created out of publicly available sources, their use requires advanced knowledge of budgetary data and their classification, as well as data gathering, merging, and clearing, which required many hours of work over a year. Fiscal variables were created out of raw data of over 25 million subcentral governments records. They were sourced from Rb27s (revenue), Rb28s (expenditure), RbNDS (balance), and RbZtd (debt) forms, which are reported quarterly by all subcentral governments to the Ministry of Finance. These data were aggregated according to the governmental budgetary classification keys into ready-to-use variables. Furthermore, these data were used to create original EU-financed local investment drives proxy variables based on large investments in general and in sports objects in particular. Moreover, subcentral electoral data from 2002, 2006, 2010, 2014, and 2018 were sourced from the National Electoral Commission, mapped, cleared, merged, and used to create original electoral competitiveness variables. This dataset can be used to model different aspects of fiscal decentralization, political budget cycles, and EU-funded investment in a large sample of local government units.
Márcia Miranda Soares, Encarnación Murillo García, Jesús Ruiz-Huerta Carbonell
Abstract The article compares the patterns and territorial inequalities in the funding of two social policies that are pillars of the welfare state and present a high degree of territorial decentralization in Spain and Brazil: education and health. The analysis uses specialist literature, national legislation and government documents to describe the policies and their financing mechanisms. Fiscal data are used to analyze subnational government inequalities in the funding of education and health in both countries. The conclusion is that the Spanish experience has significantly leveled spending on health and education between the autonomous communities of common regime, with lower levels of inequality than those observed in Brazilian states and municipalities. The Spanish result derives from an incremental process of improvement of the country’s fiscal federalism, which culminated in a model marked by prioritization and territorial solidarity in the funding of social policies. This model is reference for the analysis and discussion of the Brazilian case, which has configured its fiscal federalism with little concern for reconciling efficiency and equity in the distribution of resources between subnational governments, but which has presented important advances in the reforms of education and health funding.
Ato Rakhmawan, Arifuddin Arifuddin, Anas Iswanto, Hamrullah Hamrullah
Economic growth is the main target in the economic development of an area as well as in the city of Makassar where local governments are required to maintain the stability of economic growth in the region.The Fiscal Decentralization in Indonesia has been applied since 2000, the consequences of this policy are given the financial to local governments.However, there are several issues which are whether the delegation of authority given by the central government to the local governments that can contribute to economic growth in the region in the implementation of authority.Fiscal decentralization is one of the indicators affecting economic growth in line with financial performance and the Human Development Index.The purpose of this research is to find out how big the influence of fiscal decentralization, financial performance and the Human Development Index on economic growth in Makassar City for the period 2011 to 2021.The data in this study are secondary data taken at the regional Finance and Assets Office.and the office of the Central Bureau of Statistics.By using the multiple linear regression method and using SPSS application tools, the results of the study were found.Based on the partial test results indicate that Fiscal Decentralization and HDI have a negative and insignificant effect on economic growth, while the financial performance variable has a positive and significant effect on economic growth in Makassar city.
The current financial predicament of Local Government Councils and constant pressure for increase in allocation has been in the front burner of Local Governments Administration in Nigeria. The focus of this research paper examined Local Government Finance in Nigeria using Ife Central Local Government. Data for the study were gathered from face-to-face interview and available records in Ife Central Local Government. The data collected were subjected to descriptive statistics (simple percentage) and content analysis. The study explored various sources of financing local governments in Nigeria. It also explained financial relationship of Nigerian local government vis-à-vis State and Federal Government using theory of decentralization. The study went further to explain financial management in Ife Central L.G. Result obtained from the analysis shows that financial transfers from federal government (Statutory Federal Allocation) are the most viable and reliable source of local government revenue and that without Federal Allocation no capital project can be embarked on. Therefore, to arrest this financial situation that local government find itself, that is over dependence on federal allocation, this work submitted that local government should increase their revenue base by laying more emphasis on the internal revenue sources, especially those areas that are hitherto neglected or not been fully exploited.
Rafael Berriel, Eugenia Gonzalez-Aguado, Patrick J. Kehoe, Elena Pastorino
We apply ideas from fiscal federalism to reassess how fiscal authority should be delegated within a monetary union.In a real-economy model with no fiscal externalities, in which local fiscal authorities have an informational advantage about the preferences of their citizens for public spending relative to a fiscal union, a natural generalization of the classic decentralization result by Oates (1972) applies.Namely, a decentralized fiscal regime dominates a fiscal union, and the degree of dominance increases as the information of the fiscal union worsens in quality.In the presence of direct fiscal externalities across countries, however, a decentralized regime is optimal for small federations of countries, whereas a centralized regime is optimal for large ones.We then consider a monetary-economy model, in which governments finance their expenditures with nominal debt and inflation has a negative impact on aggregate productivity.If the monetary authority can commit to an inflation policy, then a version of Oates (1972)'s decentralization result holds.By contrast, when the monetary authority lacks commitment power, the resulting time-inconsistency problem generates an indirect endogenous fiscal externality.In this case, when a country-level fiscal authority chooses a higher level of nominal debt, it induces the monetary authority to inflate more to reduce the level of distortionary taxes needed to finance the higher debt.Because country-level fiscal authorities do not take into account the costs to other countries of the inflation that their fiscal policies induce, a negative fiscal externality arises.This externality naturally becomes more severe as the number of countries in the monetary union increases.Hence, as in the real-economy model, a decentralized fiscal regime is optimal for small monetary unions, whereas a fiscal union is optimal for sufficiently large ones.Our key result is that as the size of a monetary union increases, it becomes relatively more desirable to centralize fiscal authority.We conclude by discussing the implications of our results for the debate on the integration of fiscal policy within the EU and its enlargement.
The purpose of the article is to disclose and deepen the theoretical provisions on the nature and role of the revenue side of local budgets in ensuring the socioeconomic development of territories. The State financial policy should be focused not only on solving urgent current problems and tasks, but also have a perspective character, which consists in creating the preconditions for socioeconomic development. The article conceptualizes the role of the local budgets’ revenues in ensuring the socioeconomic development of territorial communities. The main functions of local budgets are defined. The concept of sustainable development and a totality of indicators that characterize it are studied. The theoretical aspects of the impact of local budget revenues on socioeconomic development are revealed. The advantages of budgetary decentralization are determined, the indicators of budgetary decentralization in the field of revenues are considered. The provisions on the impact of decentralization on socioeconomic development are generalized. The authors applied a system approach. They also used the dialectical method, methods of synthesis and analysis, comparison and generalization. It is substantiated that local budgets play a significant role in regulating socioeconomic processes, performing both distributive and regulatory functions. Local institutions should have sufficient financial resources at their disposal to finance public services and infrastructure development. The transformation of interbudgetary relations is intended to increase fiscal responsibility and motivation to accumulate own budget revenues to cover expenditures. It is defined that fiscal decentralization is aimed at improving the quality of public administration and the formation of financially viable territorial communities. The decentralization processes are intended to improve the quality of public administration and form financially viable territorial communities in which the basic set of public services will be as close to the consumer as possible, and the quality of these services will meet the established criteria.