commission on fiscal imbalance 合集

76 administration fdrale des contributions charge

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Unformatted text preview: s fiscal burden on firms (28 per cent) in order to keep up with, or to catch up, the huge economic development of the Basle–Zürich area during the last 15 years. The cantons of Fribourg (5 per cent), Vaud (4 per cent) and Neuchâtel (2 per cent) have also lowered their business taxation for similar reasons, though to a lesser extent. Now, as Table B shows, these reductions in cantonal fiscal burdens on firms are such that, despite a considerable decrease in business taxation in the French-speaking part of Switzerland, business activities are still attracted by the German-speaking cantons, which have been able to grant better fiscal advantages to firms. As a matter of fact, if the average index in Table B is set equal to 100 for Switzerland as a whole, the index movements for the French-speaking cantons show a relative increase for all of them (except Geneva) over the last five years (1995–9). Clearly, fiscal competition among the seven French-speaking cantons (including Berne) is not enough to outcompete the rest of Switzerland for attracting business activities and thus enhance regional economic development. On the contrary, as pointed out in Table A, fiscal competition is such that, on the whole, all local governments lose a considerable part of their revenues because of the lowered fiscal burden on firms’ profit and capital. TABLE B INDEX OF FISCAL BURDEN ON BUSINESS PROFIT AND CAPITAL IN FRENCH-SPEAKING SWITZERLAND, 1985–99 Canton 1985 1995 1999 Berne Fribourg Geneva Jura Neuchâtel Valais Vaud 118.1 106.8 101.3 111.8 138.6 118.6 97.1 95.3 ↓ 101.8 ↓ 117.5 ↑ 104.7 ↓ 138.6 -114.2 ↓ 105.0 ↑ 98.0 ↑ 104.3 ↑ 114.5 ↓ 105.7 ↑ 151.0 ↑ 117.1 ↑ 107.8 ↑ Switzerland 100.0 100.0 100.0 Sources: Administration fédérale des contributions, Charge fiscale en Suisse 1985, Bern: Statistical Series, 18, 1986, p. 74; Administration fédérale des contributions, Charge fiscale en Suisse 1995, Bern: Statistical Series, 18, 1996, p. 76; Administration fédérale des contributions, Charge fiscale en Suisse 1999, Bern: Statistical Series, 18, 2000, p. 76. Now, when one considers the fiscal competition between (French-speaking) cantonal governments from a public choice point of view, one can notice that each canton merely reacts to the contingent situation, instead of taking the lead and obtaining a durable benefit in macroeconomic terms. In the end, firms are therefore not attracted to a specific localisation, since the ongoing process of fiscal competition among local governments removes any comparative advantage these authorities might have one over the other in the short run. This situation is further reinforced by the problem of asymmetric information. In fact, when a firm is looking for fiscal advantages (basically, a reduction of its tax burden), it often starts negotiations with more than one canton or local authority. This allows firms to know and compare the various sorts of fiscal advantages offered by competing governments, whereas any of the latter does not kn...
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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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