This preview shows page 1. Sign up to view the full content.
Unformatted text preview: d management, without widespread risks of failure. As a consequence, the power to
decide and finance the provision of public services has remained largely (and jealously) in decentralised hands, in the
Cantons or in the communes. Many forms of co-operative federalism have flourished in the last decades, whether in
formal institutions like the inter-cantonal treaties ("concordats intercantonaux") or informal, like the inter-cantonal
conferences of Ministers or high civil servants for various functions.
However, the fairly extensive autonomy of cantonal and local governments for their finance is not unlimited. Competition
between jurisdictions is a first limit. Second, many cantons have introduced their own constitutional rules with regard to
(balanced) budget and debt limitation (section 4). Fiscal competition is partly softened by rules of tax co-ordination and
harmonisation (section 5). However, autonomy in public expenditures, direct access to many revenue sources and,
above all, differences in the Cantons' economic potential (see Table 1, columns 6 to 8) have led to relatively important
regional disparities, expressed in the fiscal burden of the Cantons and in their financial capacity (Table 9 thereafter).
These disparities are at the core of the Swiss equalisation policy, although there is no claim for perfect equality between
the Cantons or the communes (section 6). 2. FISCAL DEMOCRACY In fiscal federalism, institutions play an important role in shaping the relations between the layers of government. It is
therefore of interest to shed some light on the working of the institutions in Switzerland, particularly on the rules and
principles, which govern the assignment of functions and revenue sources to decentralised jurisdictions. Four
institutional characteristics are essential in the working of Swiss federalism: (1) the vertical division of power in the
Constitutions, (2) direct democracy, (3) initiatives and referenda and (4) horizontal co-operation between governments at
the cantonal and communal levels. 2.1. The vertical division of power
The Swiss federal system emphasises the sovereignty of subcentral jurisdictions, i.e. the Cantons and the local
communities. This sovereignty is derived from the federal and cantonal constitutions, which list not only the tasks of
each government level, but also fix their right to levy some sorts of taxes. Thus, the assignment of competencies and
revenue sources is guaranteed at each level of government. The vertical division of power, intended to prevent stable
majorities from being able to exploit minorities, is strongly safeguarded in the Constitution (KNAPP, 1986;
63 Commission on Fiscal Imbalance Article 3 of the new Federal Constitution of April 18th, 1999 guarantees the Cantons' sovereignty in all the spheres in
which the Constitution does not explicitly provide for the federal government's competence. Article 42 Cst defines in a
restrictive manner the assignment of functions to the Confederation: "...
View Full Document