commission on fiscal imbalance 合集

Commission on fiscal imbalance合集

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Unformatted text preview: e commune of Berne (the capital city of the Canton and also the federal city) an increase of the tax coefficient from a multiple of 2.2 to 2.4 of the cantonal direct taxes levied in the commune. The reason was that the electorate of the commune had rejected for the third time the 1994 budget, which presented a deficit and required for balance an increase of taxation. In Fribourg, the Canton controls on a yearly basis the books and the public debt of the communes. It intervenes if the current account is not balanced or if amortisation of the debt and the effective reimbursement of loans are not sufficient according to legal minimum rates. Cantonal intervention takes several forms, but it can go so far as to impose a higher tax coefficient to the commune at fault in order to restore its financial situation. Commission on Fiscal Imbalance cantons in 1998 represented on average 6 per cent of total cantonal own revenues; and 7 per cent for the communes (tables 6 and 7). ♦ Finally, there is also a large debate about the effectiveness of financial referenda on the size of the public sector, on the one hand, and on the reinforcement of budget discipline, on the other hand (see section 2.3.) 4.2. Macroeconomic policy The decentralisation of government functions raises problems for macroeconomic control at the national level. This is because cantonal and communal accountability involves the access to own revenue sources together with the right of the Cantons and the communes to borrow. Uncontrolled access to capital markets and mismanagement of the budgets by cantonal and local government could jeopardise the efforts, if any, to stabilise the economy. For this reason, so the textbook argument runs, central government ought to have some monitoring or control power. But one must distinguish whether the assignment of responsibilities and revenues to the cantonal and communal tiers is in balance and regular, or volatile and subject to strong cyclical variation. In the first case, control can be restricted to the golden rule, that borrowing is allowed only for infrastructures, and the time-path of capital investment. In the second case, borrowing may be needed not only for investment, but also to compensate for cyclical variation in the budget (higher social assistance expenditures, with less revenue, in downwards cyclical turn). Yet, effective decentralised public finance may be somewhat distant from the textbook theory. Stabilising tax adjustments is a mere conjecture in the Swiss situation: the electorate has to vote the tax law at the cantonal level, or the tax coefficient at the local level: while it may accept variation in taxation, whether to restore a balanced current budget or for new investments, it is unlikely to do so just for macroeconomic reasons. In addition, the time path required for such a decision is probably foreign to upward or downward changes in the macroeconomic trend. On the other side, the economic classification of public expenditures, in table 6, gives an interesting first insight for macroeconomic policy. At the federal level, current and capital grants-in-aid account for 59 % of total expenditures, wh...
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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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