commission on fiscal imbalance 合集

For local taxes of which municipalities can vary the

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: hat complement 100 per cent of the difference; for states with a relative position between 92 and 100 per cent, the marginal transfers closes 37.5 per cent of the gap. On the other side, the contributing states see their marginal own financial resources reduced by rates ranging from 15 per cent (for a relative position between 100 and 101 19 per cent of the national average) up to 80 per cent (for a relative positions above 110 per cent of the average). FIGURE 3 The equalizing effects of the Finanzausgleich are considerable. The program guarantees that the fiscal capacity of all states attains at least 95 percent of the average tax capacity. The marginal burden on the contributing states reaches 80 20 percent, and it may even exceed the 100-percent mark under certain conditions. 18 19 20 44 The equalization yardstick also accounts for tax revenues of the state’s municipalities (at 50 percent). For local taxes, of which municipalities can vary the tax rate, an average national tax rate is used to standardize revenue. An unsystematic element of the scheme is the compensation for some “special burdens” according to paragraph 7 (3) FAG, which is taken care of by lump-sum corrections. The weighting procedure for the population is ruled in paragraph 9 (2) FAG for the states, and in paragraph 9 (3) for local governments; the latter uses a progressive scheme in line with the population of the jurisdiction. The differential weights for city states and larger municipalities can be interpreted as accounting for some “agglomeration costs” of larger jurisdictions. Canada avoids the negative impact of high implicit marginal “tax burdens” through its asymmetrical (level-up, but not down) revenue equalization system. This is the case if the sum of payments needed for the deficient states exceeds the sum of payments for the contributing states as calculated according to the formulae. In this case, the discrepancy is distributed evenly onto contributing states. Commission on Fiscal Imbalance At a third level, there is a final corrective of the distribution of public resources in the form of asymmetrical vertical grants by the federal government: so-called supplementary federal grants (Bundesergänzungszuweisungen). Such transfers according to article 107 (2) GG have been widely used after unification while they were almost insignificant before. They also were decisive in establishing consensus among the various jurisdictions with the aim of compensating the formerly sot Eastern states. In particular, factual “gap-filling grants” (Fehlbetragsergänzungszuweisungen) have been introduced that guarantee at least 99.5 percent of the average fiscal capacity for all states. Moreover, nine states out of sixteen receive federal grants to relieve the costs of “political management” (politische Führung), and the new Eastern states as well as some Western counterparts receive federal grants in compensation of “special burdens”. The volume of the highly controversial „gap-filling grants“ of the federa...
View Full Document

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.

Ask a homework question - tutors are online