commission on fiscal imbalance 合集

6 135 257 the redistributive impact of the latter two

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Unformatted text preview: l government was 5.8 bill. DM in 1998; the special grants for the new Länder were 14.0 bill. DM. The high volume of these federal grants has become subject to criticism not only by economists, who tend to stress the inefficiencies of “softening” budget constraints, but also by politicians and lawyers—and specifically the Constitutional Court—, who stress the excessive redistribution effects of this type of grants. The Constitution had reserved such forms of asymmetrical vertical intervention by the federal government for exceptional circumstances (such as unification, for instance); there was no intention to use them as regular instruments for “filling gaps” in the budgets of a majority of states. The importance by volume of each of the three steps of horizontal equalization is shown in the following table for the year 1998. TABLE 2 VOLUME OF REDISTRIBUTED RESOURCES (in bill. DM) VAT (only supplement payments) Finanzausgleich Federal grants 17.6 13.5 25,7 The redistributive impact of the latter two stages of equalization is depicted in figures 4a and 4b (see also figure 1 for the implicit equalizing effects of VAT sharing). If the equalizing effects of the various steps of the Finanzausgleich are measured in terms of the coefficient of variation, the following picture is obtained: At the beginning of the 70s, the average variation of fiscal capacity per capita before stage one (VAT distribution) was about 17 percent, and only 9 percent after stage three (asymmetrical federal grants). However, the latter played only a negligible role both in quantitative terms and in reducing regional inequalities. The equalizing impact of VAT sharing was about as important as the effect of the Finanzausgleich proper. 45 Commission on Fiscal Imbalance FIGURE 4a FIGURE 4b 46 Commission on Fiscal Imbalance If the effects of the three stages of equalization immediately before unification (1989) are compared with those of the 21 actual scheme, which was introduced in 1995, the picture changes dramatically (see figure 5 ): Expectedly, the preequalization variation coefficient is much larger than before (25.9 percent), but—surprisingly—VAT sharing alone is capable of reducing the variation coefficient to almost pre-unification levels (10.3 percent compared to 9.2 in 1989). Furthermore, the equalizing stance of the Finanzausgleich had been remarkably enlarged: After the second stage of equalization, the variation coefficient of 1995 falls to 3.3 percent (compared to 7.2 in 1989). Most remarkably, however, the third stage—asymmetrical federal grants—widens the discrepancies again rather than equalizing further. The variation coefficient attains almost the same level as before the Finanzausgleich. Of course, this is mainly explained by the preferential treatment of Eastern states, but even for the Western states the federal grants program would increase regional discrepancies rather than mitigate them. FIGURE 5 4. THE CONFLICT BETWEEN SOLIDARITY AND SUBSIDIARITY It is increasingly being realized in Germany that homogeneity as to outcomes has its price. The ensuing degree of regional redistribution has clearly been pushed bey...
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