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Unformatted text preview: ernment making an expenditure should be the one that funds it, since this encourages a greater sense of
responsibility in the management of public funds. Access to autonomous tax fields also satisfies the constitutional
autonomy of federated political entities and provides them with the tools they need to express their tax policy
preferences. According to Paul Bernd Spahn:
12 An autonomous tax policy – at least ‘at the margin’ – is an essential and constituent element of state
sovereignty. It strengthens the accountability of politicians and bureaucrats vis-à-vis their citizens, and
thus contributes to render state budget policies more responsive, effective and efficient (p. 51). Otto Beierl maintains that “centralization of national fiscal policy leads to a reduction in the states’ fiscal responsibility”
(p. 55) and he goes on to suggest that the German federated states (Länder) should have more fiscal autonomy.
Bernard Dafflon notes that the Swiss cantons enjoy broad fiscal autonomy and that as a result,
[…] the tax burden can differ substantially from one jurisdiction to another according to their view
about the tax system, the combination of the ability-to-pay and the benefit principles, and the
progressiveness of the rate schedules. Additional reasons are that the cantons provide varying levels
of consumption of public services and have significant differences in the unit cost of providing public
services at comparable minimum standards (p. 81).
However, full fiscal autonomy of federated entities can raise certain problems. Tax base mobility and the tax competition
that may result between federated states can prompt federated states with an independent fiscal policy to impose an
insufficient tax burden. This harmful tax competition (OECD 1998) is evoked by Bernard Dafflon and Magali Verdonck.
However, the migrations induced by different taxation practices are, in some cases, relatively minor, as is the case in
Switzerland, according to the authors quoted by Bernard Dafflon. In addition, some point out that, far from eroding the
tax base of federated states, tax competition actually encourages the adoption of efficient taxation practices. This, as
some of the conference speakers point out, is one of the advantages of tax competition.
11 12 4 In this regard, Robert Ebel notes the definition of “own revenue” proposed by Richard Bird of the University of Toronto: “Bird (2000) defines own
revenues as taxes (i) that are assessed by subnational governments, (ii) for which subnational governments set the rate, and (iii) the revenues accrue
to the local government. A revenue may be ‘own source’ even if the tax base is centrally defined and the proceeds are centrally collected” (p. 148).
The various categories of taxes and the degrees of autonomy that attach thereto are described in Box 3 of Robert Ebel’s paper.
He is referring to the Länder, i.e. the federated states, and not to the federal state. Commission on Fiscal Imbalance The problem of tax base mobility is acute for many federated states, in particular the Bruxelles-...
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