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Unformatted text preview: capacity less costs.” The reform of
local taxes would restore to fiscal capacity a legitimacy that it lost in the past. Correlatively, the place of fiscal capacity in
equalization mechanisms must be redefined in order to finally introduce the notion of “expenses.”
Broadly speaking, the reduction in the State’s financial expenses would allow the latter to subject local authorities to less
drastic conditions than in the past in the context of the three-year contractualization of budget allotments. In this way, the
State would accept more generous indexing. The DCTP would regress less rapidly and its elimination would be avoided. 238 Commission on Fiscal Imbalance The need for financial equalization would be for a constant budget allotment, better satisfied. In addition to this
compulsory vertical equalization achieved through State aid, there would be a voluntary equalization all the more
probable as it depends on the development of intercommunal groups.
The departments and regions would withdraw from communal and intercommunal equalization in order to concentrate
on their own fields of jurisdiction. Joint financing would decline without disappearing altogether.
The two sub-scenarios are identical to the preceding scenario. The ultimate crisis in local finances would be avoided.
Through the restoration of financial decentralization, local authorities would achieve greater autonomy and obtain more
flexible resources that would allow them to reduce their indebtedness or better control growth in their debt. In both
instances, conflict over the debt margin with the State would be avoided. 6. CONCLUSION 1. The two preceding scenarios describe extreme paths. Between the two, numerous other avenues are possible, depending
on the ability of territorial authorities to defend their fiscal autonomy and the capacity of the national budget to pursue the
assumption of local taxes. Consequently, while the first scenario is not wholly certain, the second one is even less so. The
likelihood of undertaking a sweeping reform of direct local taxation seems relatively remote. Between the complete
disappearance and the restoration of financial autonomy, the future course of direct local taxation is likely to follow
numerous intermediary paths.
Two compromise dynamics could mitigate the rigour of the recentralization scenario in respect of the territorial authorities
without leading to the genuine restoration of fiscal decentralization. The first avenue, which is closer to the recentralization
scenario, would lead to the nationalization of tax (the solution would consist in gradually lowering the business turnover
threshold required to take advantage of the “ceiling” on the value-added business tax, and tightening the “rate tunnel,”
which would result in a value-added business tax for all). The second avenue, which is more in keeping with the
decentralization alternative, assumes the maintenance of the location of collection within broader fiscal divisions.
In contrast to the two preceding scenarios, a third scenario is based on the maintenance of the location of the tax. Fairly
unanimously preferred by a vast majority of l...
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