Blockchain Papers

Markus C. Arnold, Florian Elsinger, Frederick W. Rankin

No abstract is available for this record.

Qichun Zhang, Shu‐Fang Li

Fiscal decentralization has been established in the People’s Republic of China (PRC), but crises emerge at the local government level due to remaining problems of the fiscal administration system of tax allocation and the impact of replacing the business tax with a value added tax. The PRC taxation system requires readjustment and local governments have begun to focus on innovative financing models. The main path to stable and sustainable government finances is to maintain the general public budget and the government fund budget. The present chapter shows that use of innovative fundraising and financing channels will lead to the upgrading of local government infrastructure and public services. Suggestions for enhancing local government fiscal stability and sustainability include: reducing the fiscal burden at the local level by standardizing and legalizing outlay establishing a modern taxation system; establishing a standardized and predictable transfer payment system by introducing block transfer payments and prioritized transfer payments as a basis for a stable growth mechanism for general transfer payments; promoting public–private partnership legislation to encourage participation of social capital and maximize the multiplier effect of public expenditure; and improving the mid-term budget and debt-annexed budget and establishing a government planning mechanism for investment and debt financing of major infrastructure construction projects.

Uma Shankar Prasad

The first Constituent Assembly (CA) was dissolved without producing the constitution. The Constitution of Nepal as Federal Democratic Republic was promulgated on September 20, 2015 by the second CA. The primary objective of this study is to review the modality presented in the new constitution on the natural resources, economic rights and revenue allocation and recommend some amendments. The study finds that the fiscal decentralization initiatives have not been successful in minimizing the political, social, economic, regional and ethnic inequalities inherent for nearly 240 years of a unitary system of governance in Nepal. The study recommends: VAT and income taxes will have to be collected concurrently at both the central and sub-national levels. Other taxes including excise duties will have to be collected by the sub-national governments which will support the expenditure responsibilities of the sub-national governments adequately in federal Nepal. Intergovernmental transfer modality has to be included in the constitution. A Federal Finance Commission (FFC) and the National Planning Commission will have to be constituted at the central level to make national level development plans and to make recommendations for additional grants and loans. A State Planning Commission (SPC) and a State Finance Commission can be established in each state to prepare state development plans and to deal with the transfers to be made to local bodies.

Young-Aa Ryoo, Pildoo Kim

No abstract is available for this record.

Benjamin W. Akins, Jennifer Chapman, Jason M. Gordon

A Whole New World: Income Tax Considerations of the Bitcoin Economy

Zareh Asatryan, Lars P. Feld, Benny Geys

Recent theoretical research suggests that financing sub-national governments’ expenditure out of own revenue sources is linked to more responsible budgeting, because the financial implications of spending decisions then are internalized within a jurisdiction. We test this proposition empirically on a sample of 23 OECD countries over the 1975-2000 period, and find evidence in line with the hypothesis that greater revenue decentralization (measured as sub-national governments’ share of own source tax revenues in general government tax revenue) is associated with improved sub-national government budget deficits/surpluses. This finding is cross-validated with a novel, independent dataset consisting of all 34 OECD member states from 2002 to 2008.

Alejandro Drexler, Antoinette Schoar

We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers are on leave are less likely to receive new loans from the bank, are more likely to apply for credit from other banks, and are more likely to miss payments or go into default. These costs are smaller when turnover is expected, as in the case of maternity leave, or when loan officers have incentives to transfer information, as in the case of voluntary resignations. This paper was accepted by Wei Jiang, finance.

Richard M. Bird, Enid Slack

SUMMARY Many countries are decentralizing in various ways. Decentralization is often intended at least partly to make government more efficient, flexible, and responsive. Many studies have evaluated the effects of decentralization on the provision of such services as health and education as well as on corruption, stability, and growth. Because what governments do and how well they do it is inseparably entangled with the question of how they are financed, this article outlines why and how a key element in a sound decentralization program should be to strengthen the linkage between local expenditures and local revenues—called here the Wicksellian Connection. Copyright © 2014 John Wiley & Sons, Ltd.

Thomas W. Slattery

No abstract is available for this record.

Authors unavailable

The decentralization system impacts the change of the local tax regulation. Based on the Law No 34 of 2000 on local tax and retribution, local government may determine new kind of taxes besides what has established in this Law, but they must refer to the available criteria. Tax as one of the important local incomes to finance either the government operation or local development and to support the accountable, real, and extant decentralization . After the Law No 34 of 2000 has been replaced by the law No 28 of 2009 on local tax and retribution, local government is not allowed to pick up tax other than what the law has determined. The basis of the tax and the discretion is extended. To improve the tax accountability; this law stipulates that some parts of tax income should be allocated to finance activities relevant to such tax.<br /><br />Keywords : Local Tax

Eva Sáenz Royo

After over thirty years of decentralization in Spain and having to face the acute economic crisis, it may be time to raise new proposals that could increase the economic efficiency by means of increasing the responsible performance of regional demand and supply of public goods and services. This is the context of this article, which is a critical analysis of expenditure and revenue responsibilities in Spain from a comparative law perspective. Regarding the expenditure responsibility, this article highlights the imprecision of the Spanish system and its underdeveloped legal theory and judicial cases on the subject compared to federal states. After a comparative analysis on the revenue responsibility, this article highlights some of the major drawbacksof Spanish system of regional financing, and finally it makes severalproposals addressed to improve the fiscal responsibility of the autonomous communities.

Alfred M. Wu, Wen Wang

This study is the first attempt to examine the determinants of expenditure decentralization at sub-provincial levels in China. The Chinese central government gives detailed guidelines to local governments on public finance, but, ironically, their expenditure assignment is far from being well-regulated. Differences in fiscal decentralization on the expenditure side are enormous among local governments. Employing a panel dataset of 1995–2006, we provide empirical evidence that transfer dependency negatively affects expenditure decentralization in Chinese local governments. It suggests that intermediate governments, i.e., provincial governments, may have “grabbed” central grants for self-interests.

Nestor M. Davidson, Sheila R. Foster

In the discourse of local government law, the idea that a mobile populace can “vote with its feet” has long served as a justification for devolution and decentralization. Tracing to Charles Tiebout’s seminal work in public finance, the legal-structural prescription that follows is that a diversity of independent and empowered local governments can best satisfy the varied preferences of residents metaphorically shopping for bundles of public services, regulatory environment, and tax burden. This localist paradigm generally presumes that fragmented governments are competing for residents within a given metropolitan area. Contemporary patterns of mobility, however, call into question this foundational assumption. People today move between — and not just within — metropolitan regions, domestically and even internationally. This is particularly so for a subset of residents — high human-capital knowledge workers and the so-called “creative class” — that is prominently coveted in this interregional competition. These modern mobile residents tend to evaluate the policy bundles that drive their locational decisions on a regional scale, weighing the comparative merits of metropolitan areas against each other. And local governments are increasingly recognizing that they need to work together at a regional scale to compete for these residents.This Article argues that this intermetropolitan mobility provides a novel justification for regionalism that counterbalances the strong localist tendency of the traditional Tieboutian view of local governance. Contrary to the predominant assumption in the legal literature, competition for mobile residents is as much an argument for regionalism as it has been for devolution and decentralization. In an era of global cities vying for talent, the mobility case for regionalism has significant doctrinal consequences for debates in local government law and public finance, including the scope of local authority, the nature of regional equity, and the structure of metropolitan collaboration.

Omri Y. Marian

Virtual currencies are online payment systems that may function as real currencies but are not issued or backed by central governments. As demonstrated by recent events, virtual currencies present regulators with significant challenges. On May 23, 2013, the U.S. federal government brought an indictment against the operators of Liberty Reserve, a popular virtual currency, charging the operators with money laundering and operating an unlicensed money-transmitting business. The same month, the Government Accountability Office ("GAO") made public a report exploring the potential tax-compliance risks associated with virtual currencies and economies. Legislators have also taken particular interest in one type of virtual currency-Bitcoin. On August 13, 2013, the U.S. Senate Committee on Homeland Security announced plans to start an inquiry aimed at establishing a regulatory framework for Bitcoin. This short Essay describes the mechanisms by which "cryptocurrencies"-a subcategory of virtual currencies-could replace tax havens as the weapon-of-choice for tax-evaders. I argue that it is reasonable to expect this shift to occur in the foreseeable future due to the contemporary convergence of two unrelated, yet parallel, processes. The first process is the increasing popularity of cryptocurrencies, of which Bitcoin is the most widely recognized example. Unlike other virtual currencies that are associated with the existence of a virtual economy-usually in computer games-cryptocurrencies "function as a unique currency with [their] own free-floating exchange." Over the past three years, Bitcoin gradually gained the confidence of consumers, retailers, and service providers, and it is now effectively functioning as a currency in the real world. In fact, in August 2013, Bitcoin was officially recognized as a legal form of tender in Germany. Only two weeks earlier, a federal judge ruled that for purposes of U.S. securities regulation, Bitcoin is indeed "money."

Samuel Siebie Ankamah

Fiscal decentralization has gained support by most of the world’s leading development organizations including the World Bank, United States Agency for International Development and, Asian Development Bank among others in the last two to three decades. It is therefore of much importance that some form of thought is given to the operations of this system to make it more beneficial. Drawing selectively on large academic and practical literature on fiscal decentralization and the articles in this volume, this article outlines the state of fiscal decentralization in current times. It then goes on to outline some key arguments in favor of and against fiscal decentralization as a system of government. The theoretical framework of fiscal decentralization is also discussed in this article with regards to the stabilization, distribution and allocation functions. An overview of this system of government so far as Ghana is concerned has also been touched on with much emphasis on the legal framework and the key sources of finance for subnational governments. Finally, a number of factors for improving and making this system more beneficial and sustainable over time are identified.

Violeta Ruiz Almendral

The aim of this paper is to present a frozen image of the current Spanish system of fiscal federalism, in light of the tensions that the economic situation, has brought about. With this purpose, I will first broadly offer an outline of how decentralized Spain actually works, and how the decentralization process was brought about. Then I will focus on how the financing system works for most Autonomous Communities. Finally, I will attempt a preliminary analysis of the recent constitutional reform. A main conclusion of this paper is that fiscal federalism in Spain is, in fact, a work in progress. This paper has been previously published at the eJournal of Tax Research, (Australia); Volume 10, N. 1/2012.

Elisabeth Alber, Alice Valdesalici

Against the backdrop of the financial and economic crisis, federal and regional States are engaging in several reforms. The financial constitutional design and institutional setting in the area of fiscal and financial matters are being revised in order to better adapt to the current challenges, which result both from the supranational sphere of economic governance and the domestic one. The rationale behind these reforming processes lies in the struggle between the apparent needs to re-centralize while accommodating decentralization claims. The paper focuses on federal and highly regionalized European States by adopting a comparative domestic perspective and investigates reform processes in the area of fiscal matters and financial intergovernmental relations. It explores the most significant features that permeate the various legal orders, trying to single out the different trends in shifting powers in favour of either (re)centralization or decentralization. To this extent the recognition of autonomy on the revenue side and the accommodation of autonomy and solidarity within the new fiscal regimes will be analyzed. Moreover,intergovernmental cooperation in fiscal and financial areas will be scrutinized trying to point out crucial characteristics from a comparative perspective. To this regard particular attention will be given to major recently established bodies and procedures in the fiscal and public finance area as well as to their role within domestic economic governance.

Žan Jan Oplotnik, Boštjan Brezovnik, Borut Vojinović

This research paper focuses on the compliance of the actual system of financing local selfgovernment in Slovenia with the basic principles of the theory of decentralization and guidelines of the European Charter of Local Self-Government. It addresses the level of costs coverage within the municipal competence by using the allocated appropriate expenditure resources calculated according to the Law of Financing Municipality Act. The purpose of the paper is, therefore, to look for an answer to the question whether and to what extent the obtained funds correspond to the actual workload that municipalities have for performing statutory tasks and for exercising their competences. Analysis shows that, on an aggregate level, these actual systems ensure enough resources for local governments to cover their actual costs and current expenditures; some groups of municipalities, e.g. larger urban municipalities, municipalities with large proportions of elderly people etc. are faced with lack of funding, according to the actual costs data available, while other groups of municipalities receive more funds than they need.

Pablo Simón, Santiago Lago Peñas, Alberto Vaquero García

This paper studies the effect of political variables on the gains obtained by Spanish regions in periodical bargaining of the intergovernmental financing agreements and on the regional distribution of discretional earmarked grants over the period 1987-2008. First, we find that the relationship between gains in transferred revenues and on regional public debt stocks depends on the period and the specific issues discussed in the corresponding negotiation, aside from political affinity. Second, we show that the most discretional program of earmarked grants is strongly driven by electoral strategy. National incumbents tend to allocate intergovernmental transfers where there are competitive regional elections. Moreover, we show that earmarked grants are allocated in those regions where the incumbent performs better in national elections and, especially, in those where there are more seats to be won. Hence we prove that both strategies are complementary rather than exclusive.

Luc Eyraud, Lusine Lusinyan

In many countries the decentralization of spending responsibilities has outpaced the decentralization of revenue powers. Sub-national governments have then to rely on transfers from the center and borrowing to finance their spending. When this occurs, we find that the overall fiscal deficit tends to increase. This result is based on cross-country econometric evidence from OECD countries, and is particularly strong in the presence of regional disparities. Fiscal discipline can be strengthened by ensuring that sub-national taxing powers are adequate to meet spending obligations.

Ernesto Longobardi

No abstract is available for this record.

Luc Eyraud, Lusine Lusinyan

No abstract is available for this record.

Abderrazak Dhaoui

This paper studies the relationship between R&D decentralization and financial performance. It examines also the impact of this decentralization on earnings management. To specify what does matter in the decentralization of the R&D we try to examine the relationship between centralization or decentralization of the R&D and the firm’s performance on one hand and the earnings management as measured by discretionary accruals on the other hand. We use two internal finance indexes (internal cash flows, internal market capital) and two mechanism of governance (stock-options, institutional investors) to explain the determinants of the R&D’s strategy.Using a sample of 160 U.S. Multinational companies (MNCs) between 2001 and 2006 our results show that MNCs decentralize their R&D for dual goal to improve firm’s profitability or performance and to help manager to manage earnings in their own interest. Moreover, despite the fact that R&D decentralization has a positive impact on performance, institutional shareholders and performance-based compensation encourage managers to decentralize their R&D in order to spur their opportunistic behavior.

Stuti Khemani

A recent trend in decentralization in&#13;\n several large and diverse countries is the creation of local&#13;\n jurisdictions below the regional level -- municipalities,&#13;\n towns, and villages -- whose spending is almost exclusively&#13;\n financed by grants from both regional and national&#13;\n governments. This paper argues that such grants-financed&#13;\n decentralization enables politicians to target benefits to&#13;\n pivotal voters and organized interest groups in exchange for&#13;\n political support. Decentralization, in this model, is&#13;\n subject to political capture, facilitating vote-buying,&#13;\n patronage, or pork-barrel projects, at the expense of&#13;\n effective provision of broad public goods. There is&#13;\n anecdotal evidence on local politics in several large&#13;\n countries that is consistent with this theory. The paper&#13;\n explores its implications for international development&#13;\n programs in support of decentralization.