{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

commission on fiscal imbalance 合集

Table 44 illustrates the functioning of the safety

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: n. Briefly, this article shows that when a region grows poorer from the standpoint of personal income tax, its share of the personal income tax transfer diminishes but the equalizing transfer from which it benefits increases in such a way that the financial loss stemming from the first component is more than offset by the gain through the equalizing transfer. All things being equal, a region whose inhabitants grow poorer enjoys an increase in budgetary revenues. The reduced growth rate was initially set at 90% of GNI during preparatory deliberations, based on a calculation designed to cancel the losses of the poorest regions. The negotiators ultimately opted for 91% of GNI, which reflects a determination to give the appearance of consistency to the special financing act that would result from the negotiations. The 91% figure appears in communities’ financing formula but, in this instance, it is a figure based on real estimates, as we explained in section 2.2.1. Thereassez sans cela was no justification for adopting this figure, with the result that confusion now reigns in respect of this already sufficiently complex draft special act. 215 Commission on Fiscal Imbalance for a larger portion of its revenues, but the mechanism applies to the three regions. It is in this perspective that the safety net was introduced. The safety net’s relatively simple principle is set out in section 17, §2 of the special act of July 13, 2001 and consists in compensating the regions whose revenues form the new regional taxes change too unfavourably in relation to the negative term that they relinquish to the federal government. However, the main objective of this idea was lost during its technical implementation. It has been stipulated that if the total revenues from the newly transferred regional taxes decline nominally below the average between 1999 and 2001 (in 2002 BEF), the region concerned will be compensated for the difference between this average and actual revenues. Compensation is integral for the first five years and decreases gradually over the five subsequent years, after which time the mechanism will be eliminated. This safety net obviously plays only a political role since, were it to be applied one day, it would mean that a region had experienced a genuine fiscal catastrophe. Since the amounts in respect of 2007, for instance, will be compared in nominal terms to an amount in 2002 BEF, revenues will have to have declined by more than the accumulated inflation between 2002 and 2007 before the region benefits from the mechanism. Table 4.4. illustrates the functioning of the safety net. It indicates revenues from the old regional taxes in the Brussels region from 1991 to 2000 and we simulate what Brussels would have received in the form of a safety net transfer had the safety net been introduced in 1994. To this end, we have calculated the average regional tax revenues between 1991 and 1993, expressed in 1994 BEF. We thus obtain the reference amount of 9788.2 millions BEF, with which total revenues for 1994 and subsequent years will be compared. Each year for which this amount exceeds total regional tax revenues...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online