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Unformatted text preview: from the federal government to the states
are conditional. According to Bill Fox, they account for about 40% of direct spending by the states and, according to data
provided by Bruce Wallin, 31% of spending by states and local communities. The federal government maintains
significant control over these transfers. 13
14 6 COMMISSION ON FISCAL IMBALANCE (2001), Intergovernmental Fiscal Arrangements : Germany, Australia, Belgium, Spain, United States,
Switzerland, Background Paper for the International Symposium on Fiscal Imbalance, 13 and 14 September, Québec.
Article 106-3. Commission on Fiscal Imbalance In Switzerland, the two orders of government have access to varied sources of taxation and the cantons enjoy
considerable fiscal autonomy. According to Sonja Wälti, unconditional transfers from the federal government account for
6.4% of the cantons’ revenue while conditional transfers make up 20% (17% according to Bernard Dafflon). A major
reform of the equalization system is under study in this country.
In countries like Italy, the United Kingdom and Spain, responsibilities have begun and continue to be transferred to
regional political entities. In Spain, the transfer initiated with the adoption of the 1978 Constitution is substantial. The
Constitution stipulates that “the autonomous communities shall enjoy financial autonomy for the development and
exercise of their competencies” (article 156-1). Autonomous resources to fund new responsibilities are increasing, as
Pere Galí points out in the case of Catalonia. But since responsibilities have increased more rapidly than autonomous
resources in recent years and decades, the issue of the fiscal autonomy of the autonomous communities is central to
political negotiations in Spain.
According to Guy Gilbert, “the de jure and de facto exercise of public financial power in France is […] much more
decentralized than in many other unitary countries, including in the European Union,” (p. 227) [OUR TRANSLATION] largely
because of the 1982 to 1986 legislation on decentralization and jurisdictions. However, in his view, the country has
reached a crossroads, as a desire to recentralize has emerged. 3.2. Extent of Jurisdictions of Federated States and Regions
3.2.1. Revenue Decentralization Taxation is already highly decentralized in the two oldest modern federations, the United States (1789) and Switzerland
(1848). Their federated entities, states and cantons, have access to a large number of sources of revenue over which
they have considerable control. American states and Swiss cantons make ample use of this fiscal autonomy, resulting in
significant differences in fiscal policy. In the U.S., states and local administrations account for a growing share of
government revenue since World War 2, attributable to the growth of their revenue in relation to GDP, while the federal
government’s share of revenue in relation to GDP remained relatively stable. Bill Fox believes that federal control over
everything affecting inter-state commerce in the United State...
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