commission on fiscal imbalance 合集

General purpose grant subcentral government share is

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Unformatted text preview: Uneven distribution of tax bases among subnational governments forces the residents of one subnational area bear the economic burden of taxes imposed by another jurisdiction. Taxation of natural resource is the best example of this type of taxation practice. 7. The revenue yield should be stable and predictable over time. 8. The revenue system should be easy to administer efficiently and effectively. 9. Subnational taxes should be visible to encourage subnational government liability. 165 Commission on Fiscal Imbalance Box- 3: Fiscal autonomy in subcentral governments Own taxes Base and rate under local control. Overlapping taxes Nationwide tax base, but rates under local control Nontax revenues Fees and charges. Generally, the central government specifies where such charges can be levied and the provisions that govern their calculation. Shared taxes Nationwide base and rates, but with a fixed proportion of the tax revenue (on a tax-by-tax basis or on the basis of a “pool” of different tax sources) being allocated to the subcentral government in question, based on (1) the revenue accruing within each jurisdiction (also called the derivation principle) or (2) other criteria, typically population, expenditure needs, and/or tax capacity. General purpose grant Subcentral government share is fixed by central government (usually with a redistributive element), but the former is free to determine how the grant should be spent; the amounts received by individual authorities may depend on their efforts. Specific grants The absolute amount of the grant may be determined by central government or it may be “open-ended” (that is, depend on the expenditure levels decided by lower levels of government), but in either case central government specifies the expenditure programs for which the funds should be spent. Source: Anwar Shah, The Reform of Intergovernmental Fiscal Relations In Developing & Emerging Countries, Policy and Research Series #23, World Bank 1994. 5.3. Intergovernmental Transfers The revenue and expenditure assignments give rise to vertical and horizontal imbalances within a nation's intergovernmental finances. In fact, every intergovernmental transfer system has two dimensions: (i) the vertical dimension, concerned with the distribution of revenues between central and local governments; and (ii) the horizontal dimension, concerned with the allocation of financial resources among the recipient units. A vertical imbalance occurs when the expenditure responsibilities of subnational governments do not match with their revenue raising power; the issue of vertical imbalance is widespread in all regions (see Figure 10). At least 30 percent of the subnational governments' revenues come from intergovernmental transfers in all regions. A horizontal imbalance occurs when own fiscal capacities to carry out the same functions differ across subnational governments. In all countries, these imbalances are handled trough a variety of transfer mechanism in order to allow subnational governments...
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