Strong local autonomy or decentralization process became a goal for local governments, but one of the main question in literature remains as how strong must be the local autonomy of expenditures at the local governmentsâ level. Given the great diversity of situations and legal framework over the period after 1990, I consider that Romania must have a stable legal framework regarding local public finances and stable strategy of local development designed to implement a sustainable process of decentralization in Romanian. The paper will try to emphasize the local autonomy of expenditures in Romania, taking into account an overview of this aspect and empirical evidences. In this regard, I will use the background offered by literature and legal framework and the official statistics data for analysis to identify the degree of local autonomy of expenditures in Romania. I estimate the analysis to confirm a normal local autonomy of expenditures, but also a need for improvement that require solutions and budgetary policy options as part undisputed positioning local government finance as an engine of development. I consider the paper can be considered a useful viewpoint in understanding local public expenditures in Romania and the degree of local autonomy, thus adding to the existing literature on financial decentralization field.
During the past two decades, decentralization as a silent revolution in public sector governance has generated a keen interest in a large number of countries including Poland. However, this notion is very difficult to define as it refers to a wide range of institutional arrangements on the political, economic and social levels. There are many good reasons why allocating fiscal resources and budget transfers among levels of government must come after a strict assignment of spending powers. The aim of this chapter is to point out the basic characteristics of financing system of local government in Poland. The chapter examines the structure of local revenues and the problem of financial autonomy. The research shows that the Polish public sector is already considerably decentralised, however the level of financial autonomy of local governments is low and the local revenues are unable to cover expenditures. Thus, the amounts of local public debt keep expanding. Though a system of equalizing grants was introduced to diminish horizontal fiscal imbalances, its' efficacy is still limited.
Fiscal decentralization and intergovernmental fiscal relations reform have become nearly ubiquitous in developing countries. Performance, however, has often been disappointing in terms of both policy formulation and outcomes. The dynamics underlying these results have been poorly researched. Available literature focuses heavily on policy and institutional design concerns framed by public finance, fiscal federalism, and public management principles. The literature tends to explain unsatisfactory outcomes largely as a result of some combination of flawed design and management of intergovernmental fiscal systems, insufficient capacity, and lack of political will. These factors are important, but there is room to broaden the analysis in at least two potentially valuable ways. First, much can be learned by more robustly examining how national and local political and bureaucratic forces shape the policy space, providing opportunities for and placing constraints on effective and sustainable reform. Second, the analysis would benefit from moving beyond design to considering how to implement reform more strategically.
Brazil opted for decentralization in the provision of health services at the time of the 1988 ConstitutionÂŽs promulgation. The municipalities became entirely responsible for primary healthcare provision, sharing financing responsibilities with the central government. The aim of this paper is to evaluate the impact of health spending autonomy on infant mortality rates, using Brazilian local data from 2000 to 2007. As a measure of spending autonomy we used the share (%) of overall health expenditures financed by municipalitiesâ own resources. The larger the share of health expenditures which is not financed by the central government (grants), the greater the autonomy, because local governments can decide how and on what to spend these resources, and most of intergovernmental transfers to the health sector are allocated to predefined specific purposes. The fixed effects estimates, through the use of an instrumental variables approach, show that, on average, greater spending autonomy is not associated with lower infant mortality rates. However, given that local governments and populations are different in many aspects, it is reasonable to expect a heterogeneous response to decentralization. Galiani et al. (2008), for instance, assess the hypothesis that decentralization of high schools in Argentina may have increased the difference in educational outcomes. Could the same have happened to the quality of health in Brazilian municipalities? In well-managed municipalities and in which individuals participate actively and can support their preferences, fiscal autonomy ought to improve the delivery of public services. Using a measure of efficiency in the delivery of health services to split the municipalities in two groups, we got significant results for the more efficient municipalities, implying an increase in inequality. This measure corresponds to efficiency scores estimated using data envelopment analysis (DEA). We also test for heterogeneous impacts of the Family Health Program (PSF), the most important Brazilian basic health care policy, which main expansion occurred until 2007. It is a federal Program that each municipality runs independently. Again, we find evidence of a heterogeneous response, since PSF only reduces infant mortality rates in efficient municipalities. We then confirm Galianiâs (2008) hypothesis that decentralization may help only the best to do even better.
In this paper we present the main features of the current system of financing of local self-governments (LSG) in Serbia and propose the principles and directions for its further improvements, given the current level of decentralization. For this purpose, we analyzed the current legal framework in the area of LSG jurisdiction on the one hand, and model of financing of LSGs, on the other. In addition to that, we tried to depict a financial position of LSGs and local public utility companies (LPUCs) using financial data for the period from 2011 to 2013, in order to design principles for systematic regulation of this area, the latter being of particular importance in the dominant context of fiscal consolidation policy. The general conclusions and recommendations point to the necessity to design such a concept of financing of LSGs which has a firm link between jurisdiction, i.e. type of public services provided by LSG level, and sources for financing of these jurisdictions/services - aligned in terms of quality and availability of these services with the objective possibilities. Analysis of the financial data indicates that there is relatively firm evidence in support of the conclusion that the main source of bad financial position of certain LSGs reflected in a high level of outstanding stock of payables to suppliers, lies in the inappropriate financing of public utilities and local institutions founded by LSGs.
Fiscal decentralization has been established in the Peopleâs 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 publicâprivate 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.
The current financial predicament of Local Government Councils and constant pressure for increase allocation has been in the front burner of Local Governments Administration in Nigeria. The focus of this paper therefore is an examination of Local Government Finance in Nigeria using Iwo Local Government as a Case Study. Data for the study were gathered from face-to-face interview, available records in Iwo Local Government, text books, lecture notes, journals, reports, seminar presentation and internet materials. 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-a-vis State and Federal Government using theory of decentralization. The study went further to explain financial management in Iwo 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. Keywords: Local Government, Administration, Finance, Decentralization, Nigeria, Iwo
Abstract: Financial Development Area in East Java in a time of fiscal Decentralization . This study aims to review and analyze the development of regional financial in municipalities/cities in east java province, the fiscal decentralization. Data taken from balancing regional financial information system for the financial year 2009 until 2013. These studies show that financial kabupaten/kota in east java, improving demonstrated increased the ratio of the revenue, the effectiveness of regional budgets, the index is the area, and for years the local self-sufficiency ratio 2009-2013. However, in general, the majority of municipalities/cities in east java, is still having financial ratio less healthy especially of ratios regional independency. The research found after fifteen to decentralize fiscal year only the surabaya is relatively high finance its independence. This research is to find local revenue ( pad ) and regional spending related to the regional treasury. Keywords : Local Government Fiscal Capacity, Fiscal Decentralization, East Java Abstrak: Perkembangan Keuangan Daerah Di Jawa Timur Pada Masa Desentralisasi Fiskal. Penelitian ini bertujuan untuk melihat dan menganalisis perkembangan keuangan daerah di kabupaten/kota di Propinsi Jawa Timur pada masa desentralisasi fiskal. Data bersumber dari Sistem Informasi Keuangan Daerah Dirjen Perimbangan Keuangan Daerah tahun 2009 sampai dengan 2013. Penelitian ini menunjukkan bahwa keuangan Kabupaten/Kota di Jawa Timur menunjukkan peningkatan yang ditunjukkan meningkatnya Rasio Pertumbuhan PAD, Rasio Efektivitas Anggaran Daerah, Rasio Indeks Kemampuan Rutin Daerah, dan Rasio Kemandirian Daerah selama tahun 2009-2013. Namun, secara umum sebagian besar Kabupaten/Kota di Jawa Timur masih memiliki rasio keuangan yang kurang sehat khususnya rasio kemandirian daerah. Penelitian ini menemukan setelah limabelas tahun desentralisasi fiskal, hanya Kota Surabaya saja yang relatif tinggi kemandirian keuangan daerahnya. Penelitian ini menemukan Pendapatan Asli Daerah (PAD) dan Pengeluaran Daerah berhubungan dengan rasio keuangan daerah. Kata k unci : Keuangan Daerah, Desentralisasi Fiskal, Jawa Timur
This research is meant to know and analize the performance of the finance of the local goverment , Samarinda , in the year 2013-2014. The tools of the analisis used is racional one which consists of the level of decentralization , the dependence of the local government finance , the self-standing , effectivity of the original government income and local government tax.The result of the research is that the ability of the local government concerned in the realization of decentralization is better if it is seen from the improvement of it. . The level of the dependence of the finance is smaller and smaller and the self-effort is higher though the mobilazation of the receipt of the original income goes down where in 2014 is not effective .The local government in collecting tax is good enough either in 2013 or in 2014.So it can be concluded generally that the performance of the team goes better in 2014
Article Measurement index of fiscal decentralization and the revaluation of the economic growth effect was published on December 1, 2015 in the journal China Finance and Economic Review (volume 4, issue 4).
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.
There is an extensive literature on the impact of fiscal decentralization on economic growth, development, and public sector effectiveness. However, the empirical literature on fiscal decentralization has exclusively focused on measuring the finances of elected or âdevolvedâ local governments. Other types of decentralized expenditures, including deconcentrated and delegated expenditures, have been systematically excluded from measurement and analysis in the public finance and development literature. Our analysis considers the extent to which using devolved expenditures as a proxy for all devolved expenditures may have impacted the findings of the empirical literature. We collect comprehensive vertical expenditure profiles for health and education services in twenty-nine developing and transition countries and find that by exclusively focusing on devolution, previous analyses have overlooked two-thirds of local public sector expenditures. By excluding these ânondevolvedâ decentralized expenditures, the previous (often inconclusive) empirical analyses are likely to have suffered from omitted-variable bias.
Indonesia has been implemented decentralization era since 2001 in order to increasing local empowerment and local capability. During this period central government gave a all of the authority to the local government excepted authority for the political, finance,national defence, justice and religion. Beside gave the authority to the local government, central government also gave the source of the financing to the local government to meet the money follows function principle. Financial stability is the most important things on the monetary area. Many theorytical background described that decentralization have relation with the local financial stability.Using statistic approach (panel data) we could be proved that decentralization have negative relation with the local financial stability and also the other variable such as population, GRDP, constriction price index and volatility of money
Many developing countries use tax incentives to attract foreign direct investment, sacrificing immediate revenue from foreign capital, even though the effects of tax incentives on investment, growth, and revenue are empirically dubious. This leads to the puzzle of why states adopt tax incentives. Extant studies of tax incentive adoption overlook the fact that many countries have decentralized fiscal authority, allowing subnational governments to offer tax incentives. Public finance scholars argue that fiscal federalism intensifies tax competition among regions. Hence, drawing on the public finance scholarship, one may ask: Does fiscal decentralization lead to a race to the top among subnational governments and an oversupply of tax incentives in a country? This article argues that fiscal decentralization affects tax incentives in complex ways. When subnational governments are authorized to set tax policies, their politicians have economic and political incentives to engage in tax competition for mobile capital, providing more tax incentives in a country. However, the politicians are less likely to do so if they are held accountable and have to fund most expenditures through own-source tax revenues. An empirical analysis of over 50 developing countries in early 2000s produces robust supporting evidence. This research challenges both the view that fiscal decentralization is always beneficial and the view that horizontal competition invariably produces inefficiently low tax rates. The impact of fiscal decentralization on tax incentives and by implication, revenue mobilization depends on the design of the centralâlocal government relations.
Ady Soejoto, Waspodo Tjipto Subroto, Suyanto Suyanto
Goal of this research is promoting human development in Indonesia through fiscal decentralization. In general, funds decentralization, economic growth, public expenditure, and a decline in total poor population in the autonomous region provide significant positive effect on human development index, thus increasing decentralization funds as balance grants to autonomous regions can be used to finance local expenditure, especially public social expenditure in education and health increased more years. Fiscal decentralization policy is instrumental in supporting the success of Indonesia's human development. In particular the research of fiscal decentralization policy yield in promoting human development as an economic overview of democracy in Indonesia counties and cities were assessed based on a review of theoretical and empirical can be concluded as follows: (1) Increased decentralization funds proven to provide significant positive effect on the amount of public expenditure. (2) Increased decentralization funds proved to have a positive effect on economic growth. (3) The increasing of total poor population in the autonomous region. (4) Regional economic growth is increased not provide significant effect on reducing total poor population. (5) Decentralized funds that transferred from central government to autonomous region proven to provide significant positive effect on human development index. (6) Economic growth provides significant positive effect on human development. (7) Public expenditure of autonomous regions provides significant positive effect on human development. (8) The decline in total poor population of autonomous region provide significant positive effect on human development. (9) In general decentralization funds policies have positive impacts on human development of each autonomous region counties and cities.
An 1998 article on decentralization focused on the element of choice as the major issue of decentralizationâgranting authority and responsibility for choice to administrative and elected officials at peripheral levels of organizations and governmentsâand introduced the concept of âdecision spaceâ to describe the range of choice allowed to local authorities for different functions (financing, service delivery, human resources, governance). This approach was based largely on principal agent theory focusing on how central authorities can circumscribe local choice by establishing rules over choice and by providing incentives for making choices that would achieve central objectives. This chapter reviews this approach and discusses its evolution in empirical studies, first focusing on defining the formal decision space (in Ghana, Uganda, Zambia, and the Philippines) and then expanding to surveys that assess the actual or informal decision space that officials reported they were able to exercise (Nicaragua and Morocco). In a more recent phase of research, the author has now expanded the scope of study to examine two additional conceptsâinstitutional capacity to make good decisions, and accountability to elected local officialsâand the interaction among decision-space, capacity, and accountability. Preliminary findings on studies using this approach in Pakistan and India are presented. In conclusion, the importance of refined definitions of decentralization to assessing what form will be most effective in achieving policy makersâ objectives is reviewed.
This paper shows that the inefficiency of fiscal decentralization in the presence of spillovers, a main tenet of the decentralization literature, is overturned in a particular transportation context. In a monocentric city where road (bridge) capacity is financed by budget-balancing user fees, decentralized capacity choices (made by individual zones within the city) generate the social optimum despite the presence of spillovers. Optimality also requires the correct population distribution across the city's zones, conditional on bridge capacities. This outcome is achieved because the user fees function as optimal congestion tolls, a result that follows from the famous self-financing theorem of transportation economics.
The present theme is conditioned by the directions of public finance reform in Moldova. The aim of the research is focused on assessing the fiscal decentralization in the Republic of Moldova, aimed at: analyzing financial decentralization conceptual approaches and examining amendments to the administrative and legislative level to strengthen the level of fiscal decentralization in the country. Research methodology is based on processes and of legislative analysis, as well as on literature. As a result, it appears that in Moldova was first adopted a policy document that clearly dimensioned an action plan to achieve a qualitative decentralization in all areas and village structures. Therefore, the author conducted a comprehensive analysis of the process of reforming the central and local public administration in Moldova, presenting argumentative scientific conclusions and formulating own recommendations which would contribute to the continuity of the reform and strengthening budgetary fiscal capacity.