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Unformatted text preview: latest), the cantons
must adapt their own tax legislation to a common unique framework (see also section 5 below).
At local level, no such difficulties exist. In most cases, the communes can only decide annual tax coefficients for the
various accessible tax sources, but have no access to defining the kind of tax they raise : it is a "take-it-or-leave-it"
situation. In many cantons, the communes can contract with the cantonal tax administration to collect communal taxes. 13 In the Canton of Fribourg, the cost for a commune is 1.5 0/00 of the net tax revenues. The cantonal tax administration collects communal taxes and
acts for the commune in all aspects of tax litigation. The tax proceeds are paid to the commune on a monthly base. 73 Commission on Fiscal Imbalance 4. BUDGET POLICY The Swiss Cantons have their own Constitutions, independent power over their budgets and their own financial
resources and, above all, they have the power of taxation. Cantonal autonomy in the area of fiscal policy contrasts with
the budget principles and the rules of taxation to which member States in other federations are subject. Legislative
authorities at the federal level, in the 26 Cantons and in every single municipality must decide the budget (current +
capital) before the beginning of the year and, of course, keep books recording revenues and expenditures. Since the mid
80s, budget and bookkeeping techniques have been harmonised. Annual budgets as such do not give a legal base for
expenditures and taxation. Each item in the current as well as in the capital budgets must be founded on particular laws
that have been debated separately in parliament and enforced prior to the budget discussion.
The federal Constitution does not impose budget principles on the Cantons. There is no federal constraint on deficit
financing, except that all tiers of government have no access to borrowing from the Central Bank. The main external
limitation on budgetary sovereignty of the Cantons is intrinsically competition with other cantons: if a canton pursues an
inefficient fiscal policy with a poor cost-benefit relationship, it will price itself out of the market. Individuals and firms will
move "à la Tiebout" to another canton ("exit", in Hirschman's terminology); or the voters or some groups of them will use
initiatives and referenda in order to obtain a modification of the "public goods / tax" mix in comparison to that of other
cantons ("voice"). Competition is even more important at the local level, particularly between communes in the same
urban agglomeration. 4.1. Budget orthodoxy
The fairly extensive autonomy of cantonal and local governments for their finance is not unlimited. There are also
internal limitations in cantonal Constitutions or laws. Two rules are generally respected, at the level of the Cantons in
their own financial laws, and in the communes under cantonal supervision (DAFFLON, 1996).
♦ The first rule is concerned with the requir...
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