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Unformatted text preview: ty in rates and the unfair nature of local taxation have been noted
repeatedly. The government’s inability to promote a reform of the tax bases, given the transfer of expenses associated
with such a reform, has led to a complete deadlock, which is reflected at present in the renationalization of the resources
of local authorities.
How has the deadlock occurred in the system of funding territorial authorities?
The growing assumption of responsibility for local taxation under the national budget does not stem from more or less
Machiavellian initiative of the dominant “player,” the central State, alone, which has finally succeeded in imposing on the
decentralized authorities an elaborate, longstanding political strategy that it has patiently implemented, a strategy that is
ultimately aimed at the disappearance of all territorial financial autonomy.
Observation of past change reveals that the situation marks, instead, the outcome of the “game” played by the players,
i.e. the State and the local authorities, each of which has at its disposal strategic resources. In some respects, the
decentralized authorities may seem to have lost the game, although not all of them in the same way. Financial
“recentralization” has scarcely affected the many authorities that have “vested rights” and that have been able to obtain
for their own benefit a large portion of the transfers distributed by the State. The others have weathered with greater
difficulty the transition and have been constrained, in order to finance their development or, indeed, to simply ensure
their survival, to negotiate the opening of new rights and new outlets on the margins of the main forms of aid.
The reforms of territorial taxation proposed in the wake of legislation governing decentralization have all failed, whether
they were introduced by the State (the business tax) or the local authorities (the departmental income tax).
In light of resistance to head-on treatment of the “crisis” in local taxation, the only way to respond to growing opposition,
especially from the business community, has been to increase the tax relief offset by the national budget.
However, the explosion in the budgetary cost of tax relief has led the State to at least partially shift this cost to the local
authorities, through the standardized budget allocation procedure.
The growing “institutional risk” confronting local taxation is heightened by France’s participation in Euroland. In
conjunction with the euro, budgetary convergence is entrusted to the central government, which is responsible as a last
235 Commission on Fiscal Imbalance resort for deficits and the debt of central and local public administrations and social security agencies. The conjunction of
the financing needs of the three categories of agencies, especially from the standpoint of the financing of health and
retirement spending, will make the budgetary exercise especially arduous, apart from the fact that inflation will for a time
displace these strategic factors. Moreover, with regard to debt, a shift in econom...
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