commission on fiscal imbalance 合集

In reality fiscal competition between the cantons

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Unformatted text preview: n (of jurisdiction) card and the decentralization (of implementation) card makes it possible to achieve compromises and attain solutions involving mutual gains that would be otherwise unattainable. 4.2. Interplay with regard to the distribution of financial resources As is true of responsibilities, neither the Confederation nor the cantons may unilaterally reduce, increase or reallocate resources. If the Confederation seeks to increase or decrease its resources, the cantons will very likely intervene in parliament. As for the first possibility, the cantons would hesitate to agree because they would be deprived of a portion of the tax base. The Confederation has a somewhat simpler task in the realm of shared taxes since the cantons also benefit from such taxes. If the Confederation wishes to increase its own resources, e.g. the value-added tax, the cantons may intervene through their representatives on the National Council and the Council of States. However, their veto power in this instance is more limited than that of the German Länder, for example. Why would the Confederation hesitate to unilaterally increase its own revenues? First of all, because it always needs to rally a partisan majority behind its proposals (it should be remembered that the parties have strong regional loyalties) and second, because such a 7 decision is subject to a referendum. The cantons have considerable weight in the referendum process. If the Confederation intends to reduce its own revenues, the cantons would, a priori, have fewer objections. To the contrary, one might even wonder why the cantons do not exercise pressure more often in this respect. There are two reasons: first, the cantons are hardly inclined to relinquish the numerous transfers (often equalizing) financed by these resources, and second, in the case of shared taxes, they actually benefit from them. However, the cantons could step into the breach and collect their own resources instead, one might be tempted to say. In reality, fiscal competition between the cantons poses limits on such unilateral logic. Most of the cantons, even the wealthiest ones,8 accept thge existence of a certain pooled tax harvest, instead of exposing themselves to growing fiscal competition. (At this stage, federalism is functioning like a club in which the members have understood that they are facing the prisoner’s dilemma and that cooperation is more profitable than competition.) Since few tax revenues are genuinely shared between the Confederation and the cantons, a vertical reallocation of such revenues, as regularly occurs in Germany, in particular, is not possible. At best, reallocation occurs indirectly if one level of government modifies its tax base. As Chart 2 indicates, the distribution key remains relatively stable. A reduction or increase in or the reallocation of expenditures is subject to similar constraints but gives rise to different types of interaction since, in the realm of expenditure, the levels of govern...
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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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