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Unformatted text preview: ly entangled. However, the principle of subsidiarity is
a strong guideline for the assignment of functions in the fiscal hierarchy, as the example of education expenditures shows.
But creeping centralisation intervenes more en more in changing the "choice" role of sub-central jurisdictions in an
"agency" role. At the local level, more populous municipalities are in a better position for resisting to this change.
The main revenue sources of the public sector are direct taxation on individual income and wealth and on corporate profits
and capital, then expenditure taxes and user charges. But the respective proportions of these receipts vary for the three
levels of government.
Cantons and communes have low dependence on transfer payments. 77 per cent of the Cantons' revenues and 84 per
cent of the communes' revenues are own revenues. These figures contrast with a higher degree of centralisation in public
Fiscal sovereignty belongs to the Confederation and the Cantons. Yet, its exercise is tempered by inter-jurisdictional
competition and the mobility of taxable units, and limited by co-ordination and harmonisation practices and law. The
communes have no authority over taxation, but have full fiscal flexibility.
Budget responsibility is required at the three levels of government. It means that current budgets should be balanced,
borrowing can only finance investments and that only limited transfer payments are available. This is a classical approach
to public finance. In addition, direct access to many revenue sources is essential.
In addition to cantonal disparities in economic potentials, the use of non-benefit taxation by decentralised levels of
government, different cantonal ideas on tax equity and a fairly large amount of autonomy to decide and offer public services
result in large differences in the fiscal burden of individuals in the Cantons as shown by the indices of cantonal fiscal
burdens for various tax revenues.
Equalisation schemes intervene in order to compensate partly differences in the revenue-raising capacities of the Cantons.
But the amounts of transfer payments to the cantons remain modest owing to the objectives of budget responsibility and
financial autonomy of the various jurisdictions. There is no claim to obtain identical economic and fiscal conditions across
cantonal and communal jurisdictions. The Swiss experience introduces pragmatism in fiscal federalism. Financial and budgetary autonomy of decentralised
governments permits them to engage in specific public policies, alone or in many forms of horizontal and vertical cooperation. Comparison and competition between the individual jurisdictions ensure that only those policies which are in
the long term accepted by the population can be carried through.
The correct solution is not declared ex ante as binding, but emerges ex post after a selection procedure, which, like a
process of trial and error, has compared the various approaches with one another...
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