commission on fiscal imbalance 合集

The argument put forward in 1989 to justify the

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Unformatted text preview: ical order, and concludes with an explanation of the circumstances that led to a revision of the financing mechanisms under the Lambermont agreement. 1 2 3 The two special acts are dated July 13, 2001 and were published in the Moniteur belge on August 3, 2001 (see http://just.fgov.be). The authors wish to point out that any mention in this study of the special act of July 13, 2001 refers to the special act respecting the refinancing of the communities and the broadening of the tax jurisdiction of the regions. The regionalization of agriculture and the maritime fishery, external trade and development cooperation are also covered by the reform of the financing act. This study does not deal with this topic since an analysis of the budgetary impact on the various recipient entities is of limited interest as long as the regions do not implement a policy in this respect. In 1988, education was added to the cultural and “personalizable” fields of jurisdiction previously transferred to the communities, whose budgets were substantially increased through this new transfer. 195 Commission on Fiscal Imbalance 2.1.1. The special financing act of 1989 The special financing act of 1989 implemented a financing mechanism in respect of the communities based solely on the principle of financial autonomy rather than on the principle of fiscal autonomy. The communities benefited from transfers from the federal government and enjoyed complete sovereignty concerning the use of such transfers (financial 4 autonomy). However, the communities could not cause either the amounts or the sources of such funds to vary (fiscal autonomy). The funds transferred to the communities comprised three key components: financial transfers (“VAT transfer” and “personal income tax transfer”), a shared tax (the radio-TV fee), and government funding in respect of foreign students. The federal financial transfers earmarked for the communities, that is, the “VAT transfer” and the “personal income tax transfer”,5 used separate methods of calculation. The VAT transfer was calculated in three stages. Each year, an overall amount for the two communities was determined pursuant to the legislation, resulting from the transfer recorded in 1989 (296 385 million BEF) and changed annually in light of growth in the consumer price index. Contrary to the personal income tax transfer, this transfer was not tied to economic growth prior to the Lambermont agreement. The argument put forward in 1989 to justify the absence of a link with economic growth was that all of the federated entities had to participate in the budget consolidation effort. Furthermore, since the cost per student of education was high in Belgium, the negotiators took as their initial assumption that expenditures could be reduced and adjusted to the means available. This proved to be far from the case. Next, this total amount attributed to the communities was adapted to demographic changes in the student population, with a...
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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.

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