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Unformatted text preview: antage in respect of the financing
measures now in force. In actual fact, the application of this twofold principle becomes sensitive if budgetary neutrality
must be assured beyond the first year.
The first year, it is simple to deduct from each region’s personal income tax transfer the new amounts attributed to each
one through new regional taxes. This amount to be deducted is called the negative term. However, in subsequent years,
the genuine fiscal autonomy of the regions implies that the reduction in the personal income tax transfer cannot
systematically, fully offset the revenues from the new regional taxes, a fortiori if the regions modify the tax rates and
bases. It was thus necessary to define changes in the negative term that make effective the fiscal responsibility of the
regions while ensuring stable financing over time.
64 214 Collection fees will be established by an agreement concluded between the finance ministry and the regional governments (section 7(7) of the special
act of July 13, 2001).
The tax on gambling and betting, the tax on automatic amusement devices and the tax on the opening of drinking establishments.
The road fund tax on automobiles, vehicle registration fees and the Eurovignette. Commission on Fiscal Imbalance Several solutions were suggested. We are presenting them in chronological order along with the reasons that led the
regions to reject all of them except the last one, which was ultimately adopted. We are also presenting the effect that
each possibility has on the budgets of the entities concerned. An examination of these intermediate steps reveals that
the decisions may reach a high degree of technicality that makes debates obscure and undemocratic, while the impact
could be painful for certain regions. Moreover, we will see how the order in which the various solutions were examined
may influence the solution ultimately adopted.
At the outset, the federal government proposed defining the negative term of each region as the average of revenues
from newly transferred taxes collected in 1999, 2000 and 2001 (the averages were to be expressed in 2002 BEF). The
first proposal concerning the change in this negative term was to increase it solely according to the inflation rate in
respect of the three regions. This initial idea was bound to be rejected quickly since it was too costly to the federal
government, which would have transferred revenues whose growth was more or less tied to economic growth and would
have received, in exchange, amounts whose growth was tied to inflation alone. The definition of the negative term for the
first year was never called into question, but the question of its evolution in time sparked a lively controversy.
The first alternative contemplated was to link the regional negative terms to inflation and growth in GNI, although this
method raised a new problem, of redistributive order, between the regions. The personal income tax transfer attributed
to each region changes in light of growth in GNI and the regional share of overall personal income tax revenues.
Consequently, the three neg...
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