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Unformatted text preview: cal Decentralization, EDI Seminar Series, The World Bank, Washington D.C., pp.
Wissenschaftlicher Beirat beim Bundesministerium der Finanzen (1992), Gutachten zum Länderfinanzausgleich in der
Bundesrepublik Deutschland, Schriftenreihe des Bundesministeriums der Finanzen, Heft 47, Bonn. 53 Commission on Fiscal Imbalance REFORMING INTERGOVERNMENTAL FISCAL RELATIONS
IN GERMANY: THE BAVARIAN POINT OF VIEW
By Otto Beierl
I feel very honoured to have the opportunity today to talk to you about our efforts at reform in the field of fiscal relations
between the Federal Government and the federal states in Germany, and in what way the state of Bavaria has become
the driving force behind this process.
« Please note that I shall refer to what we call ‘Bund’ in German as the ‘confederation’ or
‘federal government’, and our ‘Länder’ are the ‘states’ or ‘federal states » 1. DEMAND FOR REFORMS Finances can very well express a federal governmental structure, because the fair and balanced distribution of
government spending and public revenue is essential for the smooth functioning of a confederation. In other words
through financial order we create the conditions necessary for the independence of the confederation and the individual
federal states. In this way their political autonomy can unfold within an independent, self-reliant system where duties can
be performed and budgets managed.
These federal financial regulations as an expression of the federal principle were of such importance to the drafters of
the constitution of the Federal Republic of Germany in 1949, that they have been laid down in the constitution in a
chapter of their own and are thus protected by it. This does not mean, however, that these financial regulations are
therefore cast in iron and cannot be amended according to economic and political change. I think the fact that we have
been able to cope financially with the German reunification since 1990 shows that these financial regulations are flexible
enough to meet new challenges. I will come back to that in greater detail afterwards.
Also today, in the year 2001, and in the age of globalization and progressive European consensus we are responsible
for a fundamental modernization of our federal and financial system. Over the past years and decades symptoms of
paralysis have been on the increase in the administrative practice among the confederation and the states, but also
among the states themselves, which handicap our competitiveness.
Where are these weaknesses in our system of financial relations between the confederation and the states, and among
the individual states themselves, what changes have we already been able to bring about, and what are our suggestions
- from Bavaria’s point of view - to tackle modernization? 2. TAX LEGISLATION In Germany the confederation has the right to legislate only in matters of customs duties and fiscal monopolies. For all
other taxes, the revenue of which the confederation is entitled to in part or in full, the legislative authority lies with the
states as long a...
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