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Unformatted text preview: ocal elected representatives, the preservation of the local nature of the
business tax, or at least the residual fraction of the bases, is no longer automatically guaranteed since the reform of 1999.
A purely defensive strategy would probably be doomed to fail.
The local authorities will not be able to regain genuine financial autonomy unless, aside from the freedom to spend and
borrow, they are also empowered to freely set the tax rates on the tax bases allocated to them. Such fiscal autonomy
demands that the tax bases be modernized. It is hard to imagine in France the definition of the tax base coming under the
jurisdiction of an authority other than Parliament. However, once Parliament has clearly defined the bases underpinning
the revision, its implementation could, as the Mauroy report suggests, be spread over time and be subject to the approval
of the authorities concerned. It would be desirable to maintain a deadline and for the reform to apply simultaneously to a
sufficiently large relevant geographic area to avoid any detrimental economic distortion and preserve a minimum of clarity
with regard to the taxpayers.
The guarantee of the maintenance of the fiscal autonomy of local authorities does not make any less necessary the
maintenance of transfers from the State, both for reasons of economic efficiency and because of the absence of
congruence between changes in expenditures and tax revenues, by level of local authority. The development of
intercommunal groups would considerably reduce the need for financial equalization.
If the scenarios elaborated here suggest that there is a possibility of saving the necessary fiscal autonomy of the local
authorities while avoiding a conflict with the State on questions of financing, we must, however, emphasize the overall
constraints of the undertaking, stemming from our commitments under the Maastricht Treaty. The avoidance of conflict
over the debt margin between the State and local authorities is only possible insofar as the “fiscal boundaries” between
these authorities and, indeed, social agencies, are modified. The strategic interplay between social agencies, local
authorities and the State for access to the two broadly rationed “resources,” i.e. the budget deficit and debt, has only two
outcomes (Guengant and Josselin 2001). One outcome, which would be negotiated, would lead to a voluntary division
between the players of constraints and frustrations. The other outcome would lead to one player, undoubtedly the State,
since it alone is unquestionably responsible for compliance with the budgetary and financial criteria associated with
international treaties, imposing on other organizations and public authorities a strict financial and budgetary framework.
However, there are no examples in which this strategy of the hierarchical transmission of constraints does not lead either
to changes in the internal institutional framework, or to less perennial or visible bailouts that indirectly change the...
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