commission on fiscal imbalance 合集

Table 6 illustrates the importance of the regions and

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Unformatted text preview: ncing act of January 16, 1989 is a good illustration of the specific dynamic of Belgian federalism. This mechanism makes provision for a transitional phase, from 1989 to 1999, followed by a permanent phase, starting in 2000, although the “permanent” nature must be put in perspective at present, since it applied for one year only. The discussion that follows is based, in particular, on the report of the Conseil Supérieur des Finances (1999) and Pagano (1999) (Spinoy (1998) offers an alternative presentation), while the final subsection (4.3), devoted to the broadening of the fiscal autonomy decided in the spring of 2001, will centre partly on Valenduc (2002) and the formalization of point 4.1.5. on Cattoir and Verdonck (1999). First, as the Conseil Supérieur des Finances (1999, our translation) has noted, “Belgian federalism sanctions the principle of the financial autonomy of the federal entities, each of which receives the means necessary to exercise its fields of jurisdiction, thus ensuring the entity’s budgetary autonomy. Financial autonomy also includes the possibility of borrowing.” Then it specifies that “to transfer means does not necessarily mean to ensure fiscal autonomy.” According to Cattoir and Verdonck (1999, our translation), this system is “dominated by a concern for balance between the autonomy of the federated entities and the political and monetary union of the federation.” According to Spinoy (1998, our translation), “the system of financing the federated entities is characterized, in principle, by the entities’ financial responsibility and reversible solidarity.” 4.1. Financing of the Regions The transfer of a portion of personal income tax underpins the financing of the Regions, which also benefit from ownsource tax revenues and non-tax revenues. Table 6 illustrates the importance of the Regions’ and the Communities’ different types of revenues. 181 Commission on Fiscal Imbalance 4.1.1. Financing of the Regions through a transfer from the federal government and its link with the personal income tax The law governing regionalization of August 8, 1988 transferred to the Regions fields of jurisdiction that represented in the federal budget preceding the transfer 234.7 billion BEF (5.8 billion €) out of a total excluding interest charges of 16 1517 billion BEF (37.6 billion €). It was decided to change the personal income tax into a tax shared between the federal government and the Regions and, consequently, to implement a transfer mechanism through which the federal government would transfer to the Regions a portion of proceeds from this tax, which stood in 1988 at some 836 billion BEF (20.7 billion €). Two questions arose at that time. First, how could the public finances of the federal government, then engaged in a sweeping deficit-reduction operation in order to comply with the criteria that would allow Belgium to join the euro zone, i.e. the Maastricht criteria,17 be preserved, and how could the amount reli...
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