commission on fiscal imbalance 合集

Instead of defining the procedure the negotiators

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: lemish region, has been unable to benefit from the pooling of community and regional funds. The need to review the financing mechanism has become increasingly urgent in recent years, as Table 1 below shows (it presents the growth rates of the financial resources of the different entities between 1991 and 1998). This table and, in particular, the last column, clearly indicates that growth in the financial resources of the Frenchspeaking community is the lowest of all of the regional and community entities. It is the only entity whose revenues are increasing less rapidly than growth in GDP, because of the significant portion of its resources tied solely to inflation. The effect of this factor is also apparent in the Flemish community, where growth in resources is lower than that in the Brussels and Walloon regions. However, the effect is less painful than in the French-speaking community since the VAT transfer, tied to inflation alone, accounts for less of overall revenues. TABLE 2.2 GROWTH IN THE FINANCIAL RESOURCES OF DIFFERENT ENTITIES BETWEEN 1991 AND 1998 1991 Brussels region Walloon region Flemish community Frenchspeaking community Growth in GDP 1992 22.18% 1993 6.02% 1994 1995 -6.69% 24 1996 1997 1998 12.57% 7.85% 1.28% 6.47% Growth between 1991 and 1998 58.24% Average annual growth 6.77% 6.06% 18.45% 10.56% 4.73% 3.25% 8.07% 82.60% 8.90% 4.12% 6.92% 6.19% 6.16% 3.53% 8.15% 4.56% 46.93% 5.64% 4.65% 4.80% 12.50% 9.37% 2.57% 4.93% -0.77% 2.90% 1.56% 27.74% 3.56% 5.20% 2.60% 4.80% 3.80% 3.10% 4.40% 4.30% 38.14% 4.72% Source: Bayenet et al. and the authors’ calculations. The second component of the reform of the financing of the communities concerns refunding of the radio-TV fee. The review of the existing mechanism was necessary given the willingness of certain Flemish political decision-makers to eliminate the fee, deemed to be outmoded. Indeed, the initial purpose of the fee was to achieve redistribution by means of a tax on luxury goods, although television and car radios can no longer be considered as such. The application of the fee should be reviewed in order to allow one of the entities to eliminate it without the process being blocked because of the specific status of the bilingual Brussels-Capital region. The act of 1993 that established the relative autonomy of the communities in respect of this tax lacked precision concerning the procedure through which this autonomy was to be applied. Instead of defining the procedure, the negotiators opted for a sweeping reform of the tax’s status. 24 200 This percentage, especially high in 1994, stems from the Saint-Quentin agreement (cf. supra). Commission on Fiscal Imbalance 2.2. Future prospects 2.2.1. Contents of the agreement In order to solve the problem of the structural underfinancing of the communities, the negotiations in October 2000 (Ste 25 Thérèse agreement) led to the following decision: in addition to linking the VAT transfer to inflation, provision was made to refinance the French-speaking and Flemish communities in the accrued amount o...
View Full Document

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.

Ask a homework question - tutors are online