This book is perhaps the first English language publication that explains, in full detail, Japan's local government finance. It is a handy reference book that introduces the historical development and institutional features of intergovernmental fiscal relations in Japan. Since the book is intended for both academics and practitioners, the materials covered are presented in a non-technical way. In many ways, Mochida's book provides an original contribution to the literature on Japan's local government finance; readers will learn a lot from his discussion of value-added taxes in particular. After surveying the historical development of Japan's local government finance in Chapter 1, Mochida locates it in international comparative perspective. Mochida's attentive cross-national comparison between Japan and other advanced industrial democracies, in particular Nordic countries, clarifies which institutional features define the Japanese system. Chapter 2 is specifically reserved for this comparison, where Mochida identifies key similarities and differences between Japan and Nordic countries. For instance, Japan and Nordic countries stand out among Organisation for Economic Co-Operation and Development (OECD) economies in terms of having relatively large local government expenditures, although vertical imbalances in the tax revenue structures make Japan's local government finance distinct from the Nordic systems. By carefully examining key fiscal statistics, Mochida successfully points to the pathology of Japanese local government finance, in particular the lack of electoral accountability and weak fiscal discipline.
Territorial fragmentation has been viewed as a problem in several countries of Central and Eastern Europe. Georgia is one of very few cases which has introduced an amalgamation reform dealing with this issue. The paper analyses the process of preparation and implementation as well as the consequences of the reform. It shows alternative reform proposals and discussions around them, which led to the selection of the most radical option of territorial consolidation. The paper briefly discusses the role of international aid programmes and especially of the Council of Europe (and the European Charter of Local Government) in structuring the discourse of the reform. On the basis of a public opinion survey and interviews, it shows that in spite of radical character of the reform it did not attract much of public attention, which is related to the fact that local government is not seen as an important element of the Georgian political system. In spite of initial declarations of the goals of the reform, the actual change was limited to the redrawing of administrative boundaries by the omnipotent (Leviathan) state and was not accompanied by parallel functional or fiscal decentralisation. According to some interpretations, the reform led to an even more centralised power structure. The price of the negative consequences of the amalgamation (such as local government being more distant from the citizens) has been paid, but the potential positive results of more capable and powerful local governments have not been achieved. Unreformed financial system has not allowed to reduce regional inequalities in capacity to finance local services either. Central government is afraid that decentralization may strengthen separatist tendencies undermining unity of the country and that is why the government is hesitant to introduce more decentralization.
In this paper, we consider the effects of the 2003 local government reform (Law 131) on the budgetary systems of local governments in Russia, paying special attention to the allocation of functions and tax resources between different levels of government. An evaluation based on the standard theory of fiscal federalism and an international comparison indicated that Russia's institutional characteristics exhibit two parallel and contradictory tendencies. On the one hand, they tend to normalize according to the theory of public finance, but, on the other hand, the administrative and budgetary systems become centralized, which contradicts the global trend of decentralization.
Fiscal decentralization is one component of decentralization that gives authority to local governments to collect revenue through taxes and responsibility over spending decisions. Even though fiscal decentralization has given revenue raising and spending decision powers to lower levels of government, the implementation process has often been a daunting task for many local authorities in the developing world. In the case of Ethiopia, decentralization has been implemented since 1991. However, revenue raising and expenditure management are not efficiently and effectively exercised, especially in lower level government units of Ethiopia. Insufficient revenue collection and reprehensible expenditure management leads to financial incapability such that public infrastructure and services could not be financed amply. Dangila municipality faces the problem of financial capacity to deliver infrastructure and services to its citizens. While a number of studies have documented the financial incapacities of Ethiopian municipalities, they have been very shy to articulate the discrepancies and deficiencies that link financing to service delivery. It is interesting to know what the driving factors are in this case. Therefore, the main focus of this paper is to assess the efficiency and effectiveness of revenue collection and expenditure management of Dangila Municipality. To obtain edifying data the paper used a positivist survey study. Municipality financial documentation and questionnaires were the main sources of secondary and primary data respectively. Parametric descriptive statistical methods were applied in the analysis of data to arrive at measures of efficiency and effectiveness in revenue collection and expenditure management of the municipality. The study revealed that the municipality is not efficient and effective in its revenue collection and expenditure management. The main explanation for such inefficiency comprise; derisory assessment of taxable sources, poor organizational structure, inadequate accounting system, absence of clear operational guidelines, poor planning and data base management, lack of awareness by taxpayers and lack of skilled manpower. To resolve such challenges, we recommend the following actionable measures; widening the revenue base of local sources of revenue, improving planning and implementing capacity, establishing adequate data base systems, continuous awareness creation for taxpayers, establishing appropriate guidelines and methods of revenue collection, revision of the tariff structure regularly, installing accounting system that produces timely and reliable information, encouraging community participation in planning and resource allocation and municipal restructuring that take into account needs and welfare of employees. Classification-JEL: R53, R42
Rural local governments in India provide essential services to over 70 percent of the national population. Yet, little is known about the efficacy of the financing system that supports these local governments, nor is there a fiscal information system that will allow a tracking of rural local government expenditures and revenues. In this article, we describe the role of rural local governments in India's; federal system, and use a database, newly gathered for West Bengal State, to present an analysis of rural local government financing patterns. We find that expenditures are significantly higher in less populated and more backward gram panchayats. At the margin, however, higher rates of literacy also are associated with higher levels of spending, suggesting an education effect.
The aim of the present work consists in the methodological study of the instruments for the equalization of the local public incomes in the administrative-territorial structures for the elaboration of some measures for the effectiveness increase of the local public expenditures modality and for the improvement of the public services quality. The research theme is important for the local economy and financial literature on local public finance. It is known that the tax base of the territories is quite uneven and providing quality public services is impossible based on their own sources. Financial equalization is a group of financial actions made in order to overcome economic and fiscal disparities between territories. The applicative value of work consists in the research of the public services financing modality for the improvement of their quality, scientific argumentation of the necessity of the incomes equalization at the territories. As for findings, I consider that the support for less developed local public administration from the financial point of view requires fiscal decentralization and involves financial equalization procedures or other similar measures aimed at eliminating the effect of unequal distribution for potential funding sources. The purpose of financial equalization is the additional funding of less developed territories in order to reduce regional disparities, and in this lies the value of the hereby study.
The social security system of transfer payments is not only an important measure to resolve the problem of the vertical and horizontal imbalances of social security finance among all levels of governments,but also an important component of the social security system and the financial transfer payment system.The theories of public goods and fiscal decentralization are the important theoretical fulcrum for the social security transfer payments system.The attribute of social security products should be analyzed concretely in view of the different items according to the characteristics of public goods.The Hierarchical theory of public goods is the foundation for the separation of the powers and responsibilities between governments as well as the premise for the implementation of the social security transfer payments system.The financial federalism theory has embodied the critical characteristics of decentralization,that is to say,in view of the efficiency and the governmental functions,to realize the matching of different levels between public goods and governments.Tiebout’s voting with feet hypothesis has brought forward the equality problem of the public goods supplies between different regions;only through the social security transfers payment system to adjust the welfare gap between different regions,can the central government ensure the roughly equal level of welfare between different regions,so as to avoid the adverse consequences of frequent population mobility.
This diploma thesis analyzes the impact of the fiscal federalism policy on a municipality economy in the Czech Republic. The theoretical basics consist of a historical analysis of municipalities' legal status and mode of financing. That is followed by defining of a fiscal federalism model and a fiscal decentralization model, and by taxation and income analyses. Final part focuses on the income and expenditure analysis of municipalities in the period 2002-2010 and an overall evaluation.
Recent reforms of the National Health Service (NHS) financing system in Italy (D.Lgs. 446/97 and D.Lgs. 56/2000) have potentially given more responsibility for health care to Regions, increasing their power over this function. Starting from this normative process, the aim of the paper is to analyse the Italian health spending in the Ordinary Statute Regions (OSR), by proposing a model to verify empirically whether the financing mechanisms are actually defined at local level or if Regions act as agents of the central government. The empirical results do not support the evolution of fiscal federalism in the health sector, highlighting in fact that health financing decisions are mostly centralized in Italy, even if the institutional context has recently moved towards decentralization of health financing sources, extending the autonomy of sub-national governments.
By comparing the development of some typical nation's intergovernmental financial relationship,the decentralized states are on the way to centralization,while the centralized states are going to the opposite.The factors include the political system,the process of industrialization and the growth of market.China's intergovernmental financial relationship should be based on our political system,modest centralization and modest decentralization and asymmetric allocation of powers and responsibilities,to ensure the dominance status of the central finance and full exercise of the local governments.
L'objectif de la thse "L'influence de l'impact de la décentralisation belge sur le statut et les pouvoirs des communes wallonnes" est de présenter la politique locale la Région wallonne et souligner la nature de changement sous l'influence du processus de décentralisation. Elle suit le développement de la législation concerneé aux niveaux central et régional au cours de la transformation de la structure de l'Etat unitaire en fédération. La thse représente des unité fédérales et l`Union des villes et communes de Wallonie qui tant que leur représentant devrait faire les pas promouvoir leurs intérts. Ensuite, le document présente les autorités municipales et les aspects importants touchant l'influence de la communauté - son financement, la supervision ou bien la tutelle de l'exécution de la décision municipale, les facons de la coopration des communes et le secteur privé. et des modes de prestation de services. L` analyse de la composition actuelle du Parlement wallon était fait en vue d'identifier la cohérence personnelle entre les politiques communautaire et régionales. La thse ensuite présente un questionnaire lancé pour recevoir les commentaires de leurs propres dirigeants politiques locaux. Ce travail pose la question si les pouvoirs des municipalités en raison du processus de décentralisation ont changé...
The result of empirical analysis based on county-level data showed that after therevenue-sharing-schemereform in 1994,the origin of county-level compulsory education expenditure shortage in china is not only question of the money,is mainly insufficiency of county-level expenditure incentives.the reason of this result above is,under unique administration centralization and financial decentralization system in China,for need of their own achievements promote,the county-level government would give priority to arrangement for limited financial resources finance to expanding population to guarantee social stability,to capital construction investment which help promote economic growth,thus has occupied educational outlay.Simultaneously,it was discovered that difference of substitution degree of these two disbursements to county-level compulsory education expenditure of eastern middle and west part of china is obvious.In addition,due to lack of intervention mechanism,based on financial difficulties of counties and townships,the increasing of finance transfer payment simply of higher authority has had negative drive to county-level compulsory education expenditure.
We develop a dynamic politico-economic model of public investment where decisions can be made at several levels of government: federal, state, or county. The model predicts that in the absence of internal mobility, the higher level of government would fund all investments that present positive externalities not fully internalized at lower levels. But when there are important internal migrations unrelated to fiscal policy, investments that are embodied - and therefore are useful to citizens if they move to other jurisdictions, like education - are more likely to be funded at the local level than investments that are physically sunk, as infrastructure. Such pattern of migrations and financing is consistent with U.S. data.
This study attempts to understand the post-reform decentralization of infrastructure investment and transfer of responsibility in China. Changes in the institutional configuration of infrastructure investment are a reflection of the ongoing process of state restructuring. Since the economic reform, infrastructure investment has transformed from being an exclusive central state-controlled operation to a central-local bargaining regime. The functions formerly exclusive to the central government are now scaling down to local governments, while scaling out to market actors. This has fuelled the formation of new partnerships in infrastructure development. However, the scaling down and scaling out processes have not led to the total retreat of the central state, nor the relaxation of state control. Using the Wuhan-Guangzhou High Speed Rail as an example, this paper investigates the inter-scalar and relational webs of multi-actor and multi-level governance in financing a major infrastructure project. Our main argument is that the state investment regime has now shifted from an exclusive, national monopoly to an intrinsic partnership, between different tiers of governments, and between the state and the market in order to meet the demands of development and to overcome the hurdles of state budget constraints.
Sonia Esteban Laleona, Pablo de Frutos Madrazo, María José Prieto Jano
Traditionally, the academic debates about the benefits that the existence of multilevel government structures provide have been directly related to the gains in efficiency that derive from the processes of decentralization of the Public Sector. However, as of the last decades, the Public Finance has broadened its analysis towards other questions, one of them being if the fiscal decentralization influences positively in the economic growth of a country. The objective of this document is to provide a “reading guide” for this new line of investigation on the influence of fiscal decentralization on economic growth.
Alina Profiroiu, Tudorel Andrei, Marian Nica, Elena Daniela ŞTEFĂNESCU
The reform process of the state and implicitly of the public administration was a priority for the past governments of Romania. During 2004- 2009, within the reform process, the main actors involved in the coordination, implementation and monitoring of reform measures were: the Prime Minister, the Superior Council for Public Administration Reform, Public Policy Coordination and Structural Adjustment, the Ministry of Public Finance, the General Secretariat of Government, Ministry of Administration and Interior (renamed for a short time Ministry of Interior and Administrative Reform), the Central Unit for Public Administration Reform, National Institute of Administration, the National Agency of Civil Servants, and the National Modernizers Network. For evaluation of aspects related to the reform process it was designed a selective research within the members of the National Modernizers Network, for assessing their perception of the public administration reform undertaken by the institutions presented above. Evaluating their opinion can be an important point in the revitalization of the area of the administration reform process. Also, the research conducted aimed at assessing the degree of modernizers’ involvement in activities related to important aspects of the reform process: strategic planning, formulating and evaluating public policies, financial management, human resources management, decentralization, introduction of new information and communication technologies and administrative simplification.
Juan de Dios Jiménez Aguilera, Roberto Montero Granados, Pedro Enrique Barrilao González, Elena Villar Rubio
La reforma del acuerdo de financiacion de las CCAA espanolas de 2009, en vigor desde enero de 2010, profundiza en la corresponsabilidad fiscal, ampliando la capacidad normativa de algunos impuestos y la participacion en las cuotas territorializadas del Impuesto sobre la Renta de las Personas Fisicas (IRPF), el Impuesto sobre el Valor anadido (IVA) y algunos Impuestos Especiales (IIEE). Segun el mencionado acuerdo, el porcentaje descentralizado de la recaudacion por IVA y por impuestos especiales se distribuye entre las Comunidades Autonomas (CCAA) en funcion de indices de consumo territorializado mientras que la recaudacion por IRPF se distribuye en funcion de la cuota integra declarada por los sujetos pasivos residentes en cada Comunidad Autonoma (CA). Este articulo pretende mostrar evidencia sobre la traslacion del ingreso tributario entre regiones en los tres tributos debida, en parte, a que el ingreso se realiza en la CA del domicilio fiscal del sujeto pasivo independientemente de donde se produzca el hecho imponible. Las conclusiones justifican la distribucion del acuerdo por IVA e IIEE en funcion de criterios basados en el consumo territorializado, pero no asi la distribucion del tramo autonomico por IRPF que se distribuye en funcion del ingreso de los residentes. Since January, 2010, there's a new public financing agreement for the Spanish regions. This is based on the fiscal responsibility, expanding the regulatory capacity of some taxes and increasing the territorialized participation in the Income Tax (PIT), values added tax (VAT) and some special taxes (IISS). According to that agreement, the revenues decentralized of VAT and excise duties are distributed among the Autonomous Communities (CCAA) in terms of consumption rates, while the personal income tax revenue is distributed according to the amount declared by the persons living in each Autonomous Community (CA). This article treat on transfer of tax revenue between regions in the three taxes, due primarily that the tax pay is made in the CA of taxpayer's residence regardless of where the taxable event occurs. The findings justify the income distribution for IISS and VAT based on territorialized consumption, but not the regional distribution of personal income tax which is distributed according to revenue of residents.
As a way of decentralizing Public Sector, the Foral System is a clear example of Asymmetrical Federalism, since Foral Finance can apply tax measures which the rest of Spanish Autonomous Communities cannot use. From the perspective of Fiscal Federalism, the Foral System gives great tax autonomy to Subcentral Finance, but as a result the Central Government has almost no tax devices. Nowadays, this system presents serious problems regarding to the contribution to national public goods financing and the cooperation to economic stabilization. In quantitative terms, analyzing financial relations between the Foral System of Basque Country and Central Government as a whole, the paid amount underestimates more than 2500 million of euros a year the contribution of Foral Finance for period 2002-2006
Reforms during the 1990s in Russia entailed not only economic liberalization and democratization but also transition from a highly centralized unitary state to a highly decentralized federal state. Since the advent of Vladimir Putin’s presidency, former president Boris Yeltsin’s experiments with decentralization have been recognized as unsuccessful and as leading to the very collapse of Russia. A consensus has emerged—among scholars, politicians, and the society at large—that the attempt to build a successful federal system in the 1990s badly failed. The new Russian leadership has been consistently taking measures since 2000 to recentralize both public finance and politics. This chapter addresses the following questions: Why did Yeltsin’s decentralization fail? What mistakes (if any) were made in the 1990s? How effective is Putin’s reversal of Yeltsin’s decentralization? Where is the notorious “vertical of power” taking Russia? These questions have no easy answers, but the experience of other federal states and an examination of Russia’s own political economy of intergovernmental relations suggest that the approach being implemented now is no less dangerous than the spontaneous decentralization of the 1990s. Indeed, because of the size of the country and the heterogeneity of its regions, federalism in Russia is inevitable. For the effective functioning of the principles of federalism, Russia needs the “vertical of power,” which political economists refer to as political centralization. The “verticals,” however, can be different. Other countries’ experience with federalism, particularly Mexico and China, shows that the measures that Putin and company are undertaking are unlikely to succeed.
Government spending on health has grown as a percent of GDP over the last 40 years in industrialized countries. Widespread decentralization of healthcare systems has often accompanied this increase in spending. In this paper, we explore the effect of soft budget constraints on subnational health spending in a sample of OECD countries. We find countries where subnational governments rely primarily on central government financing and enjoy large borrowing autonomy have higher healthcare spending than those with more restrictions on subnational government borrowing.
This essay reviews theoretical arguments concerning the issue of decentralized redistribution. We make a representative examination of what are regarded as the merits and demerits of fiscal decentralization from a redistributive perspective, emphasizing the concepts of social solidarity. We proceed to take a closer look at the decentralization theorem, and argue that the celebrated theorem is not an appropriate framework for the issue of redistribution. We then review other merits as well, and argue that those merits largely concern the cost-efficiency of public service delivery and could be in principle exploited without compromising the principle of horizontal equity, through two forms of administrative decentralization, delegation and de-concentration. However, the local incentive problem still remains. The design of transfers and personnel control mechanism will be a crucial factor to attain the cost-efficiency of local administration.
Well known for its centralized local economic system under the national equity principle, Japan has experimented with transforming this regional redistribution system into a new local economic system of governance for more autonomous local economic growth over the past decade. This new local economic governance has been characterized by the increasing involvement of social actors, such as large private corporations and local communities, in policy processes.This dissertation reveals that new local economic growth strategies for the new local economic governance have operated under very different models in different regions of Japan, although all new local programs have been introduced under the banner of public-private partnership. New partnership programs in the local economic policy arena in the 2000s have moved toward the market model, in which local authorities pursue growth by attracting international business resources, in the major metropolitan areas around Tokyo, Osaka, and Nagoya, whereas they have moved toward the community model, in which local authorities purge growth by mobilizing local organizational resources, in the rest of Japan. The market model is embedded in market reform for deregulation that makes large private corporations' freer activities easy, whereas the community model is an attempt to strengthen the structure of endogenous networks among local authorities and local economic and social elites.This dissertation highlights two variables to explain regional variations of local economic growth strategies: dual local economic structures and diverging politico-economic coalitions. First, under the rule of Koizumi Junichiro, a coalition of promoting market reform among neoliberal politicians and large private corporations has won politically over a coalition for maintaining national equity among politicians embedded in traditional conservative center-local linkages, local business groups, and local leadership of underdeveloped areas, in national politics. The regional redistribution mechanism stopped functioning in this political choice. Instead, market reform and local community participation have been introduced as alternatives to regional redistribution mechanisms. Second, the major metropolitan areas and other underdeveloped areas, which came to stand on equal conditions for autonomous local economic growth strategies under decentralization reforms, are characterized by different situations in attracting private investment. The competitive regions of the major metropolitan areas have taken the market model as their main local economic growth strategy because they are competitive to attract private investment. In contrast, the protected regions outside the major metropolitan areas have taken the community model as their key local economic growth strategy because they have less competitive local economic structure of fading industries and scare population for attracting private investment.Over the past decade, reforms for public-private partnership in the local economic policy arena resulted in the disturbance of the Japanese way of balancing market powers and local interests in the postwar period. In the postwar period, the centralized regional redistribution mechanism, led by national politicians and central bureaucracies, functioned as a tool for social integration with consideration for national equity. However, experiments with the new form of local economic governance were not successful in balancing market reform with local community mobilization. The mobilization of local community resources could not match the political role of the regional redistribution mechanism outside the major metropolitan areas. In addition, market reform, which has been more effective in the advanced major metropolitan areas, has produced increasing regional economic disparity. Japan has faced a complicated stand-off between large private corporations detached from specific localities and local communities locked in place, which were connected by national political coordination mechanisms in the postwar period. Although each of two diverging local economic growth strategies has been effective in different regions, there was no national political mechanism for mediating local variations of these localized programs in the 2000s.
Local governments can make an important contribution to public well-being through the execution of local government policies and the delivery of public services that are important to the local citizens. For this reason, through the local budgets are financed the public goods that are selected to be more important. But if the own revenues of the local budgets are low, the local authorities are dependent on the central ones, fact that affect the allocation of resources by the destinations. Because of the unlimited needs, the local governments search for alternative sources of financing, like bank loans, loans from the capital market, leasing, using some collaboration formulas with the private sector, like public-private partnerships and other financing forms. In a analysis on Romanian case, we shows that a greater level of decentralization give to local governments greater possibilities to cover local needs by attracting new resources, also from alternative ways.
Fiscal federalism has been an important topic among public finance theorists in the last four decades. There is a series of arguments that decentralization of governments enhances growth by improving allocation efficiency. However, the empirical studies have shown mixed results for industrialized and developing countries and some of them have demonstrated that there might be a threshold level of economic development below which decentralization is not effective. Developing and transition countries have developed a variety of forms of fiscal decentralization as a possible strategy to achieve effective and efficient governmental structures. A generalized principle of decentralization due to the country specific circumstances does not exist. Therefore, decentralization has taken place in different forms in various countries at different times, and even exactly the same extent of decentralization may have had different impacts under different conditions. The purpose of this study is to investigate the current state of the fiscal decentralization in Mongolia and to develop policy recommendations for the efficient and effective intergovernmental fiscal relations system for Mongolia. Within this perspective the analysis concentrates on the scope and structure of the public sector, the expenditure and revenue assignment as well as on the design of the intergovernmental transfer and sub-national borrowing. The study is based on data for twenty-one provinces and the capital city of Mongolia for the period from 2000 to 2009. As a former socialist country Mongolia has had a highly centralized governmental sector. The result of the analysis below revealed that the Mongolia has introduced a number of decentralization measures, which followed a top down approach and were slowly implemented without any integrated decentralization strategy in the last decade. As a result Mongolia became de-concentrated state with fiscal centralization. The revenue assignment is lacking a very important element, for instance significant revenue autonomy given to sub-national governments, which is vital for the efficient service delivery at the local level. According to the current assignments of the expenditure and revenue responsibilities most of the provinces are unable to provide a certain national standard of public goods supply. Hence, intergovernmental transfers from the central jurisdiction to the sub-national jurisdictions play an important role for the equalization of the vertical and horizontal imbalances in Mongolia. The critical problem associated with intergovernmental transfers is that there is not a stable, predictable and transparent system of transfer allocation. The amount of transfers to sub-national governments is determined largely by political decisions on ad hoc basis and disregards local differences in needs and fiscal capacity. Thus a fiscal equalization system based on the fiscal needs of the provinces should be implemented. The equalization transfers will at least partly offset the regional disparities in revenues and enable the sub-national governments to provide a national minimum standard of local public goods.