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Unformatted text preview: .................................................................287 i Commission on Fiscal Imbalance GENERAL INTRODUCTION
1. INTRODUCTION The Commission on Fiscal Imbalance, set up by the Québec government, planned to hold an international symposium
on September 13 and 14, 2001 at which a number of experts were to describe intergovernmental fiscal arrangements in
various countries, namely four established federations (United States, Germany, Switzerland and Australia), one recent
federation (Belgium), one country whose institutions are similar to those of a federal country (Spain) and three nonfederal countries that nonetheless have a multilevel government structure1 (France, the United Kingdom and Italy). This
selection of countries provides a fairly complete portrait of the existing situation in developed countries with federal
systems and in a few non-federal countries with societies similar to ours. Mr. Robert Ebel of the World Bank Institute
was to provide an overview of the situation around the world, more particularly in developing countries and countries in
transition to a market economy.
Unfortunately, the tragic events of September 11 in New York forced the cancellation of the symposium. Almost all the
speakers had sent a text they intended to use for their presentation during the symposium.3 In addition, the Commission
had already conducted a study of the fiscal arrangements in six countries that were to be analyzed at the event. This
work is summarized in a document entitled Intergovernmental Fiscal Arrangements: Germany, Australia, Belgium,
Spain, United States, Switzerland.
This general introduction summarizes the speakers’ papers, an exercise that involves definite limits and difficulties. First
of all, the symposium was not held. Next, federations are complex entities whose specific features cannot easily be
isolated for comparison purposes. A specific degree of fiscal decentralization4 may prove excessive in a federation
whose people have very similar preferences, while it may prove insufficient for a federation with sharp regional
differences. Lastly, a summary seeking to bring elements present in all the texts would be doomed to failure. An
observation mentioned in many texts may not be in some, and the situation in some countries may differ from that of
most countries of the sample. The following summary will, accordingly, try to present the ideas and observations found
in many of the texts, with nuances where necessary. The Analytical Framework
The following summary is based on a number of general principles of fiscal federalism, principles that implicitly or
explicitly inspire most of the texts submitted. Fiscal federalism studies the assignment of fields of jurisdiction among
various orders of government in terms of spending (defence, health and education) and taxation (personal income tax,
corporate tax and consumption tax). It also deals with intergovernmental fiscal relations.
There is a broadly accepted presumption among fiscal federalism experts to the effect that jurisdiction over the delivery
of public services should be allocated to the order of government closest to the citizen, unless responsibility for such
delivery can be more effectively taken on by a government that is f...
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