EnglishThis paper looks at the Federal Republic of Germany in comparison with other federations in view of the basic federal idea and the distribution of competences and powers between federation and Lander. It sheds light on the tensions of decentralization and unitarization. Furthermore, the constitutional arrangements for financing federal and Lander levels are explained more in detail. And finally the paper raises a current issue: the German Finance Constitution in need of reform. francaisCet article se penche sur la Republique federale d'Allemagne, comparee a d'autres federations pour ce qui est de l'idee federale de base et de la repartition des competences et des pouvoirs entre la federation et les Lander. Il met en lumiere les tensions de la decentralisation et de l'unitarisation. En outre, il explique plus en detail les dispositions constitutionnelles relatives au financement au niveau federal et des Lander. Enfin, il souleve une question actuelle: la Constitution allemande des finances doit etre reformee.
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 revenuesâcalled here the Wicksellian Connection. Copyright Š 2014 John Wiley & Sons, Ltd.
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 After the Law No 34 of 2000 has been replaced by the law No 28 of 2009 on local tax and retribution, local government is not allowed to pick up tax other than what the law has determined.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
This paper aims to asses the transformational impact of EU integrations and e-government on the structure of government and its effectiveness and efficiency. Two examples that are used for the purpose of analysis are the Ministry of Science, Education and Sports and the government agencies that cooperate with it, and the Ministry of Finance, Tax Administration. The first is an example of the agencification model that was stimulated by European integrations in the period from 2001-2009, mainly in order to decentralize decision making and governing of the EU funds. The other example is the cash fiscalization process of Tax Administration, that was stimulated by the processes that started from 2010-2012 and are connected with the need to react to the economic crisis with the onset in 2008 that continued to the present. This process is the opposite to the first one, as it is not the process of decentralization of fund distribution, but of centralization of collection of funds, that is based on cash accounting, not accrual accounting. It can be shown that both processes were stimulated by European integrations and EU fund management, i.e. by the need to increase the collection of funds by governmnet taxing in order to meet the requirements for EU fund programmes and in order to implement European values and reduce corruption. This process is blocked by the lack of trust of citizens in government and the unequal redistribution of collected funds.
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.
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 1995â2006, 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 âgrabbedâ central grants for self-interests.
This article examines whether the efficiency gains accompanying fiscal decentralization generate higher growth in more decentralized economies, applying pooledâmean group techniques to a panel dataset of 23 Organization for Economic Coâoperation and Development (OECD) countries, 1972â2005. We find that spending decentralization has tended to be associated with lower economic growth while revenue decentralization has been associated with higher growth. Since OECD countries are substantially more spending than revenue decentralized, this is consistent with Oates' (1972) hypothesis that maximum efficiency gains require a close match between spending and revenue decentralization. It suggests reducing expenditure decentralization, and simultaneously increasing the fraction financed locally, would be growthâenhancing. (JEL E62, H71, H72 )
In the discourse of local government law, the idea that a mobile populace can âvote with its feetâ has long served as a justification for devolution and decentralization. Tracing to Charles Tieboutâs 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 â and not just within â metropolitan regions, domestically and even internationally. This is particularly so for a subset of residents â high human-capital knowledge workers and the so-called âcreative classâ â 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.
This paper uses cross-national data to examine the effects of fiscal
decentralization on educational outcomes in OECD countries. Measures of both
expenditure and revenue decentralization are included, in order to account for
the different dimensions of decentralization. Our estimated results show that the
decentralization of education expenditure responsibilities has a positive effect on
educational outcomes. These positive effects will be higher the higher the
autonomy of subcentral governments to decide on the different aspects of the
education system, and the lower the percentage of their expenditure that is
financed with conditional grants. In fact, positive effects of education
decentralization could be offset if a high percentage of the subcentral
government expenditure is financed with conditional grants from higher levels of
government. In addition, we find that the effect of expenditure decentralization
is higher the higher the percentage of taxes which are collected at the subcentral
level of government, i.e. when subcentral governments are held accountable for
taxing decisions.
Local government get the benefit right from economic growth in fiscal decentralization system,which is a important means to motivate local fiscal effort.Transfer payment is a important supplement of fiscal decentralization,which is not asymmetric.We assume local government is rational,government official can estimate each financing cost and marginal revenue.This paper use 1995-2009 year provincial panel data to analysis fiscal effort of local government,we found that local was more prefer off-budget effort than budget effort.Transfer system is lack of incentive design to fiscal effort,with the ratio of transfer payment increasing,fiscal effort of local government has been gradually weakened.
Local tax financing is of importance for local democracy and incentives for economic development and service provision. Since tax base variation leads to variation in service provision, tax equalization may be necessary to limit the adverse distributional effects. The purpose of the paper is to discuss the challenges of combining substantial tax financing, incentives, and distribution. We start out with the broad issues related to vertical fiscal imbalance, and analyse the incentive effects of tax equalization with respect to local economic development and tax distortion in more detail. The concluding section compares the âNordic modelâ to more decentralized and centralized alternatives. TheâĂ° futureâĂ° ofâĂ° theâĂ° modelâĂ° willâĂ° beâĂ° determinedâĂ° byâĂ° theâĂ° abilityâĂ° toâĂ° controlâĂ° incentiveâĂ° problemsâĂ° inâĂ° equalizationâĂ° andâĂ° toâĂ° avoidâĂ° strategicâĂ° interactionâĂ° inâĂ° aâĂ° situationâĂ° withâĂ° largeâĂ° dependenceâĂ° uponâĂ° centralâĂ° governmentâĂ° grants.âĂ°
The current system of fiscal decentralization in China has a number of serious problems. Whereas it has clearly assigned revenues between the central government and provincial governments, the current system does not provide clear expenditure assignments for almost all levels of governments. In practice, the widely unfunded responsibilities have been taken up by local governments, in particular, by the governments at and under county level. Since 1994, the responsibilities for these local governments have continued to expand. On the other hand, the âtax sharing reformâ of 1994 led to a very limited tax bases for local governments. In fact, a significant amount of local governments in China face serious fiscal crisis.
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."
Provides an overview of the framework for an analytical method created to provide country studies of Burkina Faso, Ghana, Kenya, and Senegal to address the historical and institutional design of decentralization as outlined in each country's national constitution or legislation through the use of an institutional study and a field study. The six steps in this process assess: (1) the institutional approach to decentralization, its design, and any gaps between the institutional norm and the reality on the ground; (2) the decentralized budget which provides a benchmark for comparing the financing systems of the countries studied; (3) the assignment of responsibilities across levels of government; (4) the revenue structures and systems and financial autonomy of local authorities; (5) the financial transfers through intergovernmental grants to support local governments; and (6) statistical data which can be used to measure the decentralization of responsibilities and resources.
We study the effect of fiscal decentralization on economic growth for twenty-three Organisation for Economic Co-operation and Development countries from 1975 to 2008. In order to proxy fiscal decentralization, we use both traditional Government Finance Statistics (GFS)âstyle measures and new measures that account for the degree of subnational tax autonomy. The regressions with GFSâstyle measures indicate that fiscal decentralization has a negative but statistically insignificant effect on growth. Regressions with the new measures also result in negative coefficient estimates. However, they are larger in absolute terms and statistically significant. For the empirical literature on fiscal federalism, these results imply that measures of fiscal decentralization that account for subnational tax autonomy should be preferred to traditional GFS-style measures. From a policy perspective, we conclude that policy makers should be aware of the economic trade-offs when pursuing reforms toward more fiscal decentralization.
Fiscal decentralization has gained support by most of the worldâs 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.
The aim of the paper is to review the economic theory of tax assignment across levels of government and the international experience in the use of direct taxes â personal income taxes and taxes on profits and on business value added â for fiscal decentralization. We highlight that as for other options of local taxation there are merits but also drawbacks in the use of direct taxes as a source of financing for sub-central governments and so the final choice about their use or not is a matter of judgment and depends on the political priority to be attached to different objectives, such as efficiency, equity, accountability, tax competition, administrative feasibility and revenue adequacy.
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.
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.
Our country's financial decentralization of authority belongs to the scope of decentralization authorization.There are some tax preference margins in the local finance,but it has no pivotal decision-making power and independent taxation power.Based on the data collected from 28 provincial administrative regions in our country between 2003 and 2009,this paper,in view of the special situation of the present social system and economic development,made a specific analysis of the mechanism of action in the local government financial behaviors and proposed some suggestions that the central government need to make further adjustment about assessment criterion for officials' performance and regional economy evaluation index,and properly pilot the local government financial behaviors.
This short note provides an overview of the current and previous attempts to systematically measureâand collect data onâthe scope and nature of (political, administrative, and fiscal) decentralization in countries around the world. Despite the considerable quantity of scholarship devoted to the investigation of the causes and effects of decentralization, the current efforts to collect data on the various aspects of decentralization and local governance have not given rise to a single authoritative methodology. In addition, coverage of the existing data collection efforts across developing and transition countries is poor. Despite the fact that about half of the developing and transition countries around the world interact with the people through nondevolved approaches, none of the current efforts to measure local public sector finances considers any non-devolved decentralized financing mechanisms, such as deconcentration or delegation. This void in the data with regard to decentralization provides policy makers and the research community with a considerably incomplete patchwork of information regarding decentralization, rather than resulting in a single, consistent, and robust dataset regarding the depth and breadth of decentralization in countries around the world.