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Unformatted text preview: nd are free to determine the taxation base and tax rates. Generally speaking, most
cantonal revenues come from personal and corporate income tax. Most of the cantons also levy taxes on property, gifts
and inheritances, property sales, automobiles, games and entertainment and the production of hydroelectric power. 4. INTERPLAY The horizontal and vertical imbalances in the Swiss federal system, as described in the preceding sections, are at the
heart of the federal dynamics in Switzerland. This dynamics, of which incrementalism and the balance of powers are the
hallmarks, gives rise to interplay that I would like to briefly describe below. 5
6 See also Dafflon (2001a, 2001b) and the Commission intercantonale d'information fiscale 1998.
The cantons are also entitled to a portion of other, less important taxes, i.e. the withholding tax, federal stamp duties, the tax on the exemption from
military service, and road duties. 107 Commission on Fiscal Imbalance 4.1. Interplay with regard to the execution of responsibilities
Studies of the political process in Switzerland have highlighted the problems stemming from the vertical imbalance in the
division of responsibilities, especially shortcomings in implementation (Linder 1987: 188ss). The Confederation’s lack of
monitoring instruments (or rather, its failure to use them), gives the cantons considerable leeway with respect to
implementation. Such leeway is all the broader since the opening up of the legislative process in Switzerland to interest
groups with the power to organize referenda makes the legal bases vague and subject to interpretation (Knoepfel 1996;
Kriesi 1995: 314ss). The cantons use, or indeed abuse, such leeway in order to pursue their own objectives.
This dynamics is not contested, but its interpretation is subject to debate. Some observers emphasize that, as a result,
Swiss federalism has been emptied of its content and that the cantons have become simple executive entities (Knapp
1986: 50). Others regret that the central government is not sufficiently strong to face issues such as environmental
protection, the completion of major infrastructure projects or foreign policy (Germann 1994: 57). One intermediate
viewpoint consists in focusing on the functional nature of a certain balance of power between the Confederation and the
cantons, especially as regards the resolution of conflicts (e.g., Linder 1987: 194; Wälti 1996). The federal authorities
may obtain new powers in exchange for financial transfers and the delegation of implementation to the cantons
(Faganini 1991: 54; Kriesi 1995: 76). As a result, despite the absence of a genuine joint decision-making power such as
it exists in Germany, the cantons carry weight in the federal decision-making process.
Along those same lines, the vertical imbalance that characterizes Swiss “executive federalism” is part of the Swiss
consociational model in which the cantons, like interest groups and political parties, appear as players with interests,
resources and strategies (Lehmbruch 1993: 51; Duchacek 1986: 99). The ability to play both the centralizatio...
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