commission on fiscal imbalance 合集

However the necessity to standardize will expand with

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Unformatted text preview: and (3) the impact of specific federal transfers that affect the state’s relative position as defined at stage (1). Moreover, the elements (1) and (2) would have to be standardized rather than be based on effective revenue or expenditure. In Germany there is already some standardization as to the revenue of municipalities, where an average tax rate is used rather than the effective rate. For the remainder of fiscal revenue, fiscal capacity is already largely “standardized” by the very fact that the tax law is uniform throughout the country. The latter statement is however confined to legal aspects of taxation only. In principle, standardization would have to take further aspects into account, such as regional differences in the tax base or in the effectiveness of tax administration and collection. This is indeed possible as the Australian example demonstrates. If the view is taken that such differences are negligible in Germany, there is no need to standardize revenue beyond the present provisions for municipalities. However, the necessity to standardize will expand with the scope for greater taxing autonomy of states and municipalities. This is essential for all proposals that embrace the idea of granting the states greater taxing autonomy. Relative needs criteria are to be translated into „necessary“ expenditures—again at a standardized level. The basic approach is to define the costs of providing standard public services among various governments at any one level. An ideal procedure would be to form appropriate expenditure categories for which these needs are quantified in accordance with statistical methods that could vary among categories. This is easier within the Anglo-Saxon world of vertical power sharing than in the highly entangled fiscal arrangements in Germany, which would seem to call for a certain degree of 27 28 29 50 See, for instance, Wissenschaftlicher Beirat beim Bundesministerium der Finanzen (1992); Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung (1992), Nos. 363ff.; Peffekoven (1994); Huber and Lichtblau (1997); Renzsch (1999); Rosenfeld (1999); Kronberger Kreis (2000). This is the reason why the legislature was so ingenuous to “weigh” populations in favor of city states, a procedure criticized by the Court. The Australian approach is to standardize budgets—fiscal capacity as well as revenue needs and costs—in order to determine the relative position of any one state relative to the average for the assignment of the Commonwealth’s general revenue grants. See, for instance, Rye und Searle (1997), or Spahn and Shah (1995). Commission on Fiscal Imbalance 30 „disentanglement“ (Entflechtung)—indeed popular request in Germany. However, in spite of meshed expenditure functions and a complex net of financial arrangements including cofinancing, there is a clear solution to solving such problems if element (3) is taken into account properly. It would imply that the various forms federal grants would have to be considered as strengthening own fiscal capaciti...
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