commission on fiscal imbalance 合集

In the 1980s and 1990s the paradigm shifted to

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Unformatted text preview: ment depend more heavily on each other. It is 7 8 108 In the case of the compulsory referendum, voters in the majority of cantons must approve the measure. In the case of the optional referendum, this requirement is eliminated but the cantonal political elites always play an important role in the electoral campaign. The wealthiest cantons benefit most from the direct federal tax. It is true that the cantons’ share is redistributed in the manner of equalization payments, which means that the wealthy cantons transfer part of their revenues to the less privileged ones. At the same time, the wealthiest taxpayers live in the resource-rich cantons and have the greatest exposure to direct federal tax because it is more progressive than cantonal taxes. Despite equalization, the most privileged cantons ultimately receive a larger share of the direct federal tax. Commission on Fiscal Imbalance in the intrinsic interests of the cantons with more limited resources and which are more strongly dependent on the Confederation to broaden the resources at their disposal. For this reason, new expenditures are adopted quite readily. However, this dynamics is curbed insofar as the cantons must, so to speak, “buy” the new resources, which they usually receive in the form of conditional transfers. The reduction in or the reallocation of such transfers is hard to achieve but feasible since new expenditures are often adopted for a limited time. Moreover, the budget process in Switzerland deals with revenues and expenditures on the same footing and through the same commissions. Consequently, each new expenditure calls for an increase in or the reallocation of resources and will thus be of limited scope. 5. CONCLUSION: FEASIBILITY AND PLAUSIBILITY OF REFORMS The history of the reform of horizontal and vertical imbalances in Switzerland is lengthy and fraught with failure and incrementalism. During the 1960s and 1970s, coordination and intergovernmental collaboration were the watchwords. In the 1980s and 1990s, the paradigm shifted to competition, fiscal equivalence and untangling. The change, which is characteristic of all federal systems, also obtains in Switzerland where pressure for reform is now pointing in the direction of broader fiscal responsibility for the cantons. By reducing and untangling vertical financial flows, officials hope to avoid problems of free-riding jumping and fiscal irresponsibility, i.e. the so-called moral hazard. What chance of success do these efforts have? During the 1980s, the reforms were perceived, first and foremost, as being motivated by the desire of the Confederation and the wealthy cantons to reduce expenditures in order to limit deficits: to untangle is to make accountable, and to make accountable is to discipline. While this causality is certainly plausible on paper, all the more so as most of the cantons have adopted automatic controls that demand a balanced budget, the distribution of interests among the cantons made almost illusory the attainm...
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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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