commission on fiscal imbalance &aring;ˆ&eacute;›†

# The formula takes the forms 100 ei and 100 ei 2

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: t a canton with a lower-than-high financial capacity would be entitled to receive an additional part of the15 % to the basic rate for equalising its position. The exact additional rate of grant is proportional to the difference between the two rates, here 15 %, weighted by the relative position of the cantonal index of financial capacity between 120 and 60 points. A canton with 100 points would receive (120 –100)/60 × 15 = 5 % in addition to the basic rate of 30 %, in all 35 % of the recognised expenditure for the particular project in function "j". For Ei=120, the rate of grant is Smin; for Ei=60, the rate of grant is Smax. 6.2.2. Revenue sharing The share of the Cantons in the federal government's tax revenue derives from several sources, but three revenue sharing programmes only have equalisation components: for the federal direct tax (FDT), the withholding tax (WT) and part of federal customs duties on petrol and motor fuel (DC). Historically, revenue sharing was generally implemented in order to compensate for fiscal imbalance when a cantonal revenue source was centralized (Customs, alcohol monopoly, coinage, stamp duties) or partly shared with the centre (direct and withholding taxation). With time, the main revenue sharing programmes have been connected with equalisation repayments. ♦ The Cantons receive 30 per cent of the federal direct tax IFD (income, corporate profits and capital). 17 per cent is allocated on the basis of origin, defined as the residence of the taxpayers, and 13 per cent according to financial capacity. The repartition take the form of an exponential formula Pi IFD = 0,17 IFDi + [2.71828 −0.0192104 × Ei x 0,13 IFD Hi xK ] x 1000 1′ 0 ′00000 22 where P stands for the revenue sharing part of canton "i", with the number of population serving as a multiplicand. ♦ 22 84 They also receive 10 per cent of the withholding tax IA, net of collection costs: 5 per cent is allocated according to population, and 5 per cent is reserved to the cantons with indices of capacity Ei < 100. The formula takes the forms [100 - Ei ] and [(100 - Ei )2 ], the number of population serving as a multiplicand: Detailed revenue sharing formulas are given in DAFFLON, 1995, pp. 99,112 and 131. Commission on Fiscal Imbalance PiIA = 0,10 IA x [ ♦ 2 1 H x [100 -Ei] Hi H x [100 -Ei] + x( i +i )] 2 Hf 4 ∑i Hi x [100 -Ei] ∑i Hi x [100 -Ei] 2 The federal government reimburses to the Cantons part of its revenue from customs duties and excises on petrol and motor fuel DC. Half of the receipts from the "normal" duties and the total so-called "supplementary" duties are exclusively attributed to road expenditures. 12 per cent out of this amount is reimbursed to the Cantons: as general payments for 93/100th and for international Alpine roads for 7/100th. Out of the 93/100th, 42/100th is allocated to equalisation, for the cantons with indices of capacity Ei < 100. The formula takes the form [(100 - Ei )1,4 ] with total...
View Full Document

## 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.

Ask a homework question - tutors are online