Michael Alexeev, Nikolay Avxentyev, Arseny Mamedov, Sergey Sinelnikov-Murylev
Using a panel of Russian regions, we estimate the link between intraregional fiscal decentralization and regional budget deficits. Although Russiaâs regions are not as autonomous (either politically or fiscally) as regions in some other federal states, we obtain robust and statistically and economically significant results. Specifically, expenditure decentralization has a positive effect on consolidated regional budget balances, while transfer dependence of municipalities is associated with higher deficits. The impact of revenue decentralization depends on whether a regional government can use its tax revenue assignments with the same high degree of discretion that generally characterizes explicit fiscal transfers. We show that a 2009 local finance reform that limited the discretion of regional governments to assign regional tax revenue to municipalities has changed the effect of tax decentralization on budget discipline.
Bahl and Birdâs book aims ambitiously to be a panacea for all that is unwell in fiscal decentralisation. It maps the appropriate fiscal structures and relationships between central and local govern...
Siti Aisah Bauw, Lillyani M. Orisu, Melkion D.T. Worabay
Government transfers are one of the central government's interventions in autonomous regions that aim to help regions with low fiscal capacity. With the development of transfers in Manokwari Regency which is always increasing, describing government spending in financing development still depends on the central government or balance funds. The purpose of this study was to etermine the effect of government transfers on the fiscal erformance of Manokwari Regency in the implementation of decentralization. This study is aimed at analyzing he influence of government transfers on the fiscal performance of the Manokwari District government in the implementation of decentralization. With five years of observation. Model estimation is analyzed using simple linear regression (simple linear regression) by partially testing the hypothesis. The results showed that the variable government transfer index had a positive coefficient (+) on the fiscal performance of the regional government, with a R2 value of 86% indicating a ignificant influence on the fiscal performance of the local government.
This paper examines the relationship between fiscal federalism and social policy in India through an analysis of the effects of a recent effort to increase fiscal decentralization to state governments on the nature of social policy investment at the sub-national level. Through its analysis, this paper highlights the persistence of a strong centralisation bias in Indiaâs fiscal architecture for social policy. We trace this centralisation bias to the political and administrative dynamics of the federal bargain. The peculiar dynamics of this bargain have created a context where the core goal of centralization â to ensure equity â is undermined while the expectation of decentralization â greater accountability through alignment of expenditure with local needs and preferences, fails to take root. India is thus likely to continue to witness significant regional variation in social policy outcomes, despite a centralised financing architecture.
Sajitha Bashir, Marlaine E. Lockheed, Elizabeth Ninan, JeeâPeng Tan
Addresses issues of governance, financing, and managing resources for education in Sub-Saharan Africa, where severe deficiencies in public financial management (PFM) processes affect the efficacy of resource use and do not consider the specific requirements of the education sector. Though governments have devoted sizable and increasing resources to increase access to primary education, current expenditure patterns reflect policy choices made in the past. Almost all government spending on education gets absorbed by teachersâ salaries, with little spent on complementary inputs deemed critical to improving quality. Public spending on education is distributed highly unequally among household income quintiles because almost no students from the lowest quintiles attain upper-secondary or tertiary education. Decentralization initiatives have become widespread in Sub-Saharan Africa, including decentralization to subnational and local governments; more directly, to schools, through various forms of school grants; and, in a few cases, to non-state actors such as private providers or nongovernmental organizations (NGOs).
Paolo Chiades, Luciano Greco, Vanni Mengotto, Luigi Moretti ¡ 5 authors
For the period 2003â2014, we investigate unexplored effects of fiscal consolidation in decentralized public finance on a large dataset of Italian municipalities. Based on a simple, realistic theoretical model, we show that municipalities increase arrears on committed investment expenditure as a response to intergovernmental transfer cuts. Then, we test our predictions controlling for potential sources of endogeneity, and find that a reduction in intergovernmental transfers causes a significant increase in arrears, in addition to other common adjustments to local fiscal policies (e.g., tax revenues). Our results highlight a perverse effect of fiscal consolidation packages implemented by centrally imposed fiscal restraints.
By 2022, a change in the form of government from unitary to federal will likely happen in the Philippines, a nation of 104 million. Although decentralization is not new to the country owing to the passage of the Local Government Code of 1991, the transition will have major policy implications on the assignment of expenditure and revenue (taxation) responsibilities for government functions. This study focuses on the technical and vocational education and training (TVET), an important component of the Philippine Governmentâs national strategy for economic development and poverty alleviation. TVET governance in the Philippines is placed under the authority of the Technical Education and Skills Development Authority (TESDA), an agency attached to the national government which operates a network of over a hundred TVET training schools and institutes. With the impending shift to a federal system, TESDA needs to formulate a decentralization strategy, determining which sub-functions of TVET governance should be retained at the national level, devolved/transferred to subnational governments, and shared between the two levels government. This paper maintains that in addressing these policy issues, the Philippine Government should be guided by the principles of fiscal federalism and informed by existing TVET vi decentralization models in federal countries worldwide. This paper utilizes comparative institutional analysis, an analytical framework that examines existing institutional arrangements in some jurisdictions to inform policy formulation elsewhere. TVET governance in eight federal countries are analyzed by answering this question: Which sub-functions are assigned to what level of government? The sub-functions of the TVET system are: a) policy formulation and planning, b) standard-setting and regulatory, c) financing/contracting and d) provision of TVET services to clients. Based on the findings of the study, policy makers in the Philippines are enjoined to consider the following policy recommendations on decentralizing TVET under the proposed federal system: a. TVET policy formulation, planning, standard-setting and regulatory functions should be assigned solely to the national government so that TVET governance is harmonized across jurisdictions, and to be consistent with the national governmentâs equity goals; b. Financing/contracting for TVET can initially be assigned as a âshared functionâ between the national and subnational governments; however, in the long term, the subnational governments should develop their local revenue generation capacity and eventually be responsible for TVET financing/ contracting in their jurisdictions. Policy makers should also explore alternative models for TVET financing such as inclusion of TVET in the existing Special Education Fund (SEF) and establishing a TVET Training Fund; vii c. Provision of TVET training services can initially be a âshared functionâ between the two levels of government; however, as experiences of federal countries clearly show, the primary responsibility of providing TVET services to clients should rest with the subnational governments.
China initiated a major decentralization reform in recent years to simultaneously improve tax autonomy and fiscal transfers toward county governments. We use an instrumental variables strategy and a county-level panel dataset for years 1995-2014 to examine the incentive effects of the reform. We find that the reform significantly reduced tax enforcement of the county governments, for which the result appears to be driven by the opposing incentive effects of the increased local tax autonomy and fiscal transfers. In particular, while the reform motivated county governments to improve tax enforcement by enhancing local tax autonomy, it dampened local tax enforcement because of the increased fiscal transfers. Our findings provide support to the argument in the decentralization literature that improving local tax autonomy, compared to increasing fiscal transfers, is a more effective way to finance local governments while strengthening local fiscal discipline.
Taisiia Bondaruk, Đ. S. Bondaruk, Oksana Vinnytska
Administrative reforms in Ukraine focused on decentralization of governance system, change in the administrative and territorial system by consolidating communities and redistribution of authorities and financing sources at local governance level are expected to be implemented in keeping with European standards. The need to achieve positive dynamics of the economic system in Ukraine raises the importance of studies covering the array of problems related with the operation of local budgets, including European practices of local budget formation in the conditions of decentralization and their applicability for Ukraine. The purpose of the article is to investigate foreign practices of budget decentralization and their implementation perspectives in Ukraine.
 The essence of budget decentralization is highlighted; main indicators measuring budget decentralization and financial autonomy of local self-governance bodies are shown. As three models of local self-governance financing are distinguished by main criteria of financial decentralization (Scandinavian, Latin, and Hannover), peculiarities of the local budget formation in three countries belonging to the above models are analyzed: Finland (Scandinavian model), Spain (Latin model), and Poland (Hannover model). Results of the study show that while in countries of Scandinavian and Latin model taxation of consumption and residentsâ incomes prevails, with fiscal importance of taxation of real estate, in countries of Hannover model taxation of consumption has minor significance.
This article intention was to set up the big picture of all 1,639 cryptocurrencies up and give a policy recommendation for Thai government. Hence, there were three following objectives as follows: 1) to investigate the state of the art of all cryptocurencies in the source of Code / Forking due to limitation of number of pages 2) to identify the best practice of cryptocurrency, and 3) to study the role of General Prayuth Chan-o-chaâs government towards cryptocurrency. Documentary research and descriptive statistics like frequency and percentage were used in this study. The findings found that there were twelve groups of qualified cryptocurrencies in CoinMarketCap, led by two well-known giant family of crypto market, Ethereum (35.5%) and Bitcoin (16.1%). Then, the best practices were on the provision of coins or tokens, twelve techniques for managing blokchain (such as Blockchainas-a Service), blocktime was between 0.03 and 30 minutes with Mean = 1.96, S.D. = 2.29 whereas TPS was between 0 - 1,400,000 with Mean = 1341.87 and S.D. = 36021.52, most of cryptocurrencies had their own Web Site (95.8%) and E-mail (78.8%), coding played a big role in cryptocurrency such as C . Last, cryptocurrency had both open and hidden-and-dark faces. In the open face, tax, law, peopleâs identification will be useful. In contrary to the open side, setting an autonomous public organization is one and only one solution for all cryptocentric affairs.
This article analyses the impact of state decentralization on one aspect of territorial diversity, specifically on the policy discretion of regions, as an expression of their political autonomy for self-government. Our interest focuses on the factors that determine the decisions and actions of regional governments in developing their policies. We ask: why do regional governments take different public policy options? Conceding that several factors help explain policy decisions (such as productive structure, government ideology, social capital, political context, budgetary resources), we choose to explore the impact of two of them, by asking: in what way, and to what extent, are policy decisions and actions conditioned by the financing model and by their different ideologies? We present quantitative and qualitative comparative evidence from two contrasting case studies: two regions in decentralized Spain that have developed their own policies of income and spending, and have translated them into differing public management policies and regulatory models for providing health services. These governments are ideologically different and have undergone different degrees of recent ideological changes, but the resources provided to them by the financing model have also been different. We show how resources determine the scope of governmentsâ actions, while ideology determines their direction.
This thesis analyzes whether the fiscal relations between the central and local governments of Turkey can be solely explained by socio-economic and demographic factors or the regional and political positions of cities also affect it.We use a balanced panel dataset consisting of all of the 81 cities of Turkey over the years 2008-2012.Our main dependent variables are transfers and government compensation.We define government compensation as the total government spending made in a city excluding local own revenues.Other fiscal aggregates such as local own revenues and expenditures, or fiscal indicators such as fiscal decentralization and financial independence, defined as the share of local governments spending financed by its own revenues, are also analyzed.Regression analysis and robustness tests showed the following: (i) Socio-economic structure of cities are significantly associated with the amount of transfers and government compensation; which means that the transfer rule of Turkey, as an institutional mechanism, is quite successful addressing regional socio-economic differences.Besides, there is no robust effect of political parties on the amount of transfers and government compensation.(ii) Our analysis also shows that there is a significant association between political parties and local expenditures, revenues, and expenditure decentralization.
This research examines the link between fiscal decentralization and government capacity to service debt, while controlling for fiscal, institutional, economic, and ideological factors that are associated with capacity to service debt held or issued by local governments alone, by state governments alone, and by state and local government combined at the state level. Using panel data from all 50 states in the U.S. from 1962 to 2012, we find a link between fiscal decentralization and capacity to service long-term debt outstanding held by local governments alone and by state and local governments combined. That is, fiscal decentralization is positively associated with state and local government capacity to service debt outstanding. Nevertheless, we do not find that fiscal decentralization has any relationship with government capacity to service debt issuance. Statistical results show that capacity to service debt issuance is primarily affected by capital expenditure and alternative capital financing resources such as special assessment.
Although ChinaÂĄÂŻs asymmetric fiscal decentralization system has been criticized for many years, there have been few studies giving direct evidence of its negative incentives on local government spending policies. By introducing the mechanism of asymmetric decentralization and fiscal transfers to the objective function of local government, this paper studies the incentive effects of asymmetric decentralization and fiscal transfers on spending policies of local governments, and uses the provincial panel data to carry out an empirical test. The conclusion shows that the asymmetric decentralization significantly weakens the incentives of local government to increase social expenditure, and as a solution to asymmetric decentralization, fiscal transfers fail to play a good role. Due to the relatively large income effect, the financing mechanism of fiscal transfers not only significantly reduces the incentives of local government to provide social public goods, but also weakens the constraint effect of fiscal competition on expenditure policies of local governments because of the increase in the relative cost. Although the distribution mechanism of fiscal transfers has a significant positive incentive to local government in regions where the net inflow of fiscal resources is more than zero, because of common pooling effects, the comprehensive effects of fiscal transfers in the distribution of incentives of local governments to provide social public goods are negative in all regions.
Nikos Tsakiris, Panos Hatzipanayotou, Michael S. Michael
Abstract We build a two asymmetric regions model with crossâborder pollution related to production. Each region issues emission permits and revenues from their sales finance public pollution abatement. The decentralized level of emission permits is efficient when permits are interregionally tradable and crossâborder pollution is perfect. This result is robust in a variety of casesâfor example, when (i) capital is immobile or internationally mobile or only mobile between the two regions, and (ii) revenue from permits sales is transferred to a federal authority.
Purpose-The financial aspect of local government autonomy is considered a very important topic in the public finance literature especially for the developing countries. Fiscal autonomy empowers the local government units with the right means to provide better services for the community and to proper allocate the funds based on the citizens needs. The purpose of this paper is to study the level of financial autonomy in Albanian municipalities and compare the characteristics within different units of local government. Methodology-In this paper we analyze the financial autonomy of Albanian municipalities by proposing an index to compare the governmental units and classify them in four classes according to the degree of autonomy. Seven quantitative indicators are used in the index, with different importance coefficients. Findings-In Albania, while important progress has been made on advancing the decentralization reform in the last decade, autonomy of local government still remains a challenge. Local authorities do not have appropriate financial resources and they are depended on transfers from the central government budget.
This research aims to analyse the degree of fiscal dependence of local government upon the central government in the regency of Mimika, one of Indonesiaâs eastern regencies. The ratio of fiscal decentralization is used to calculate the local governmentâs ability to increase its regional revenue in order to support development initiatives in all sectors (Malmudi, 2010). Secondary data of locally-generated revenue and total revenue from the period 2010-2015 are used to measure the degree of fiscal decentralization. The results show that the degree of fiscal decentralization in the regency remained at a low level, reflected from the average value of 12.92 percent with the highest degree, of 25.09 percent in 2012. An analysis of fiscal decentralization in the period 2010 â 2015, indicates that the regency lacked sufficient fiscal capacity, showing heavy dependence upon financing from the central government. The local government is expected to develop the regionâs potentiality through creative efforts within their governmental apparatus to increase local revenues. The funds from the central government could provide a positive contribution if used in the consumption of goods and services that potentially support economic activities.
The study aims to determine the opinions of school principals on decentralization in education. Phenomenological research design was used in the study. The purposive sampling methods of convenience and criterion samplings were used together. The study group was composed of six volunteer principals. The data were collected through individual face-to-face interviews using a semi-structured form. Descriptive analysis and inductive content analysis were used. In conclusion, from a holistic perspective, most of the participants found the concept of decentralization to be close to full autonomy which is usually perceived as dangerous in terms of the unitary state structure. Therefore, they have more centralized attitudes towards educational processes other than financing and infrastructure support regarding decentralization in education. This is indeed an indication that concerns regarding decentralization in education are high. The participants think that decentralization will not harm our national identity and the national education structure is beneficial.
Abstract The present paper describes the trajectory of China's fiscal and tax reform in the past 40 years, which can be summarized in five phases. The reform commenced with âdecentralizing power and transferring benefits.â Then, under great fiscal pressure, institutional reform was instigated, which aimed to establish a new fiscal and tax system. To regulate the government revenue and expenditure beyond the fiscal and tax system, reforms were put in place to build an institutional framework for public finance. As the fiscal and tax reform had gradually entered the more sophisticated phases, China took a series of measures to further improve the public finance system. Since 2012, based on the overall plan of comprehensively deepening reform, China has embarked on establishing a modern public finance system. The present paper characterizes China's fiscal and tax reform as gradually moving toward a system that aligns with the overall reform and complements the goal of marketization and modernization of state governance.
Since its independence the Republic of Croatia has commenced a thorough reconstruction of its taxation system according to the market economy taxation policy. Essential taxation reforms have brought the system closer to EU systems i.e. it has been being harmonized with taxation systems of developed European countries. The Republic of Croatia has adopted solutions that are used by the majority of European countries. Current tax system of the Republic of Croatia can be viewed through three fiscal levels, but this paper deals with decentralization and revenue, especially tax revenue of local and regional self-government units. The paper will present importance and a way of collecting revenue, especially tax revenue and satisfying public needs in terms of counties, cities and municipalities. The local and central characteristics of the certain types of taxes and the specialities thereof, as well as the applied functional differences are also scrutinized, and a widely accepted opinion of the taxpayers is explained. Taking these into account, the scientific contribution of this paper is that it provides a basis for further research on tax system development.