commission on fiscal imbalance 合集

638 as a matter of fact empirical evidence shows for

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Unformatted text preview: emain. Thus, formal harmonisation solves problems in terms of administrative costs, but not in terms of tax neutrality. ♦ The federal law on direct federal tax took effect on January 1st 1995. Matching the provisions of this law with the previous one has ensured vertical harmonisation of direct taxes at the three levels of government. ♦ At the communal level, formal and real tax harmonisation has been almost achieved except for the annual coefficient of taxation which depends on the balanced budget requirement. Tax competition is on the agenda of most communes, especially because of inter-jurisdictional mobility within urban areas. ♦ What could be concluded from the present situation ? (Partial) Fiscal sovereignty is important at the cantonal level, but comes with increasing problems. The difficulties experienced by Switzerland for the last three decades - in fact right from the beginning of the extension of direct taxation as a major source of revenues for the cantons - show a real need for some sort of central tax law. Recently, the Cantons have had to recognise that tax competition has had negative and undesirable consequences on regional development policies and that economic disparities between the regions and the cantons have not been reduced despite a federal regional and equalisation policies (DAFFLON, 2000). The debate is now vivid in this country. 5.3. Tax competition 5.3.1. Some stylised facts Fiscal competition among regional or local authorities within a decentralised multilevel government has long been an issue for policy makers, especially in a federal system like Switzerland, where the differences in business taxation between (or within) cantons have been rather important over the last twenty years (for a survey see Administration fédérale des contributions, 1990, pp. 63–8). As a matter of fact, empirical evidence shows for instance that in the 1980s the tax burden on the firms’ profit varied considerably between the 26 Swiss cantons, with maximum-minimum ratios ranging from 2 to 4 depending on the amount of profits and the formula used to compute them for fiscal policy targets. Similar empirical evidence seems also to exist, though to a lesser extent, for communal business taxation within the same canton (Dafflon, 1991, pp. 58–65). More recently, in fact, the 1999 OECD Economic Survey indicates that in Switzerland the average tax rate on business profits varies from 13 to 31 per cent, when the three-level government taxation is considered altogether (Organisation for Economic Co-operation and Development, 1999, p. 109). Now, such a relatively big discrepancy on business taxation between local governments (see also below section 5.4) provides a framework where fiscal competition and fiscal strategies may eventually impinge on the implementation of the required fiscal policies at the local level. This is so much so when a balanced budget requirement is taken into account. The remainder of this section focuses therefore on the theoretic...
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This note was uploaded on 03/06/2013 for the course ECON 220 taught by Professor Paulo during the Spring '13 term at University of Liverpool.

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