commission on fiscal imbalance 合集

In the realm of state aid the principle of a three

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Unformatted text preview: ic conditions would certainly raise the question of the division of access to borrowing by the three categories of players. Even more directly, France’s participation in the European Union will ultimately pose the question of the place of local authorities in community institutions and that of the role of local finances in community public finances overall. According to what comprehensive mechanism will the public finances of the member states be managed? What principle of unanimity or majority rule will be adopted? Will tax competition be limited or, to the contrary, encouraged? Will European financial equalization be established? Broadly speaking, local French finances are at the crossroads. The reform of local financing will be a key budgetary issue in the coming years. Not only is the content of the reform uncertain but also its very occurrence. The window of opportunity for a reform of local taxation is undoubtedly very narrow and the coming years will be decisive for the future of financial decentralization. Against this uncertain institutional backdrop, forward thinking is essential. Two alternative forward-looking scenarios illustrate in a deliberately highly contrasted manner the issues at hand, i.e. the pursuit of “fiscal recentralization” and the restoration of fiscal decentralization. 5.1. The pursuit of “fiscal recentralization” (Diagram 1) This scenario centres on two hypotheses. First, no agreement between the State and territorial authorities is reached on basic reform of direct local taxation. Second, the Constitutional Council is not opposed to the gradual elimination of local fiscal autonomy. The progressive nature of the assumption by the State of local taxes hides the breach to the principle of “free administration.” In the realm of taxation, the scenario stipulates that repeated local direct tax crises would be defused, as in the past, through the accumulation of premium relief funded by the State. Opposition from businesses would lead to the gradual removal of the business tax base, only the property investment component of which would remain, which would ultimately be incorporated into the property tax on developed industrial and commercial properties and thus form the second bulwark of direct local taxation of fixed assets. The first one would centre on the inhabitants, the second one on businesses. The rates of the two taxes on developed properties would now be differentiated but continue to “co-vary” according to the privity rule. The housing tax would benefit from growing relief. The tax would disappear, first of all at the regional level (since 2000), then the departmental level and finally, the communal level. The only measure of fiscal freedom left to territorial authorities would centre on the property tax on the developed properties of households and businesses. However, by dint of relying excessively on taxes and delaying the revision of cadastral assessment, now nearly 50 years old, the final bastion of direct local taxation would become increasingly precarious. In the realm of State aid, the principle of a three-year pact would be...
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