Unformatted text preview: are of total federal
5 Finance and taxation 78 42 34 7 Public economy 74 56 11 5 Transportation 64 40 21 11 Social security 52 44 23 21 7 70 27 5 14 64 42 18 Foreign affairs
National defence Justice and police
Health 1 63 48 12 General administration 19 39 45 6 Culture and recreation 13 32 58 3 Environment and land
use planning and
development 15 29 75 4 Total expenditures 39 48 33 100 Source: adapted from Eidgenössische Finanzverwaltung (2000).
*Certain expenditures appear more than once, which explains why the totals exceed 100%. The Confederation and the cantons both deplore this entanglement of responsibilities. The cantons are deprived of
decision-making power that would allow them to fully enjoy their autonomy, while the Confederation complains that it
lacks the power to ensure that its responsibilities are executed as prescribed. For this reason, current reforms of the
Swiss federal system are aimed at untangling responsibilities. Such untangling is geared to re-establishing decisionmaking and fiscal responsibilities with a view to enhancing the efficacy of the Swiss federal system. Such efforts, if they
succeed, will inevitably lead to some degree of withdrawal by the Confederation from cantonal affairs, which must be
offset by the strengthening of financial equalization, mentioned earlier.
The second variable in vertical imbalance concerns resources. A comparison of changes in the revenues and
expenditures of the three levels of government suggests that the Swiss federal system has avoided fiscal imbalance. 105 Commission on Fiscal Imbalance CHART 2
EVOLUTION OF REVENUES AND EXPENDITURES
1950 1960 1970 1980 1990 1997 Confederation Cantons Communes 100%
1950 1960 1970 1980 1990 1997 Confederation Cantons Communes However, it has to be kept in mind that the flow of funds between the three levels is considerable. The cantons’ share of
federal revenues stands at 8.3% (Office fédéral de la statistique 1999: 462, 473). Some 26.8% of cantonal revenues
come from federal funds, only 6.4% of which are unconditional (ibid.: 472). Most federal contributions to the cantons are
in the form of conditional transfers (matching grants). The latter enable the Confederation, which is largely lacking in
power to guide the cantons, to prompt the cantons to act, e.g. to build roads, cover the needs of the poor in the realm of
health insurance, or to foster scientific research in the cantonal universities.
The well-known problem stemming from this configuration is that, first of all, it is difficult to direct resources where they
are the most needed. Second, the resources steer the cantonal budgets toward “paying” activities. Third, different levels
of government can avoid blame for the financial situation. As for the first criticism, research is unanimous in showing that
the financially strongest cantons also benefit from the biggest conditional transfers simply because they have the means
to raise sufficient...
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