commission on fiscal imbalance 合集

If ever the german federation and its public sector

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Unformatted text preview: ce. ♦ In this vein of thought, the Court has even expressed its unwillingness to tolerate legislation that, in practice, conveys equalization to the sole responsibility of the Bundesrat (section 284). A simple parliamentary majority would not justify equalization at the expense of a minority of states—even though their governments may have actively and positively been involved. It conveys a responsible, balancing, and neutrally appraising role to the federal government, a duty confined by elementary, general, and overarching legal principles.10 The conflict on equalization, and hence the degree of interregional solidarity, as opposed to greater freedom to act of lower tiers of government, and hence subsidiarity, is illustrative for the fundamental issues that are at stake in Germany at the beginning of a new millennium. If ever the German federation and its public sector is to become more lively, more active and entrepreneurial, more creative and inventive at lower tiers of government, it is time to redesign not only equalization in the light of the Court’s ruling, but also to tackle more fundamental issues that go beyond the constitution, and bring stronger competitive elements to bear in the German federation. 3. THE ASYMMETRY OF SOLIDARITY It is consistent with the corporatist nature of German fiscal federal arrangements that taxes are not only uniform throughout the nation but, what's more, that their proceed are jointly appropriated. This is true for all major taxes with about 75 percent of total revenue (including the main municipal tax, the Gewerbesteuer). Revenue from exclusive state taxes is only 4.4 percent of the total. This leads not only to a jumble of political responsibilities; it also tapers financial autonomy through the packaging of tax policy and a mix-up of joint financing schemes. These limitations at the fiscal edge are now widely considered to narrow state sovereignties in particular. The provisions that reign equalization among the states solidify the ambiguity of German intergovernmental fiscal arrangements. They further blur political accountability and restrain the principle of subsidiarity. Intergovernmental solidarity has two dimensions: First there is the need to share resources between layers of government (vertical equalization); second, there is the need to apportion the states’ share among various state jurisdictions (horizontal equalization). It is useful to epitomize the horizontal equalization mechanism in three stages: ♦ 8 9 10 40 First, there is the distribution of joint taxes, in particular of VAT, among states which exhibit implicit regional equalization effects; BVerfG, 2 BvF 2/98 of November 11, 1999, Nos. 1 – 347; http://www.bverfg.de/. This and the following citations of the Court are own translations. This is in sharp contrast to the de facto behavior of the federal government which used pork-barreling to buy votes in the Bundesrat in favor of a proposed tax reform recently. The concessions even included the guarantee of specific benef...
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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.

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