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Unformatted text preview: revenues in order to obtain a big share. Moreover, the less financially advantaged cantons often take
time to embark upon a program and leave empty-handed when subsidies dry up. The second criticism concerning the
poor allocation of the cantons’ budgetary resources also seems justified, at least in the realm of investment.
The typical example of this phenomenon is the construction of bomb shelters: in order to take the fullest possible
advantage of federal subsidies put in place during the cold war to increase the availability of such shelters, the
communes have eagerly equipped each school, local home and sports centre with shelters, to the extent that some
communes have created considerable overcapacity (Kissling-Näf and Wälti 1999). To the contrary, subsidies intended to
make health insurance affordable for low-income earners are underutilized, especially in those cantons that need the
subsidies the most. Unlike the first two criticisms, the third criticism concerning the avoidance of blame seems to be
unfounded. In comparison with the Confederation, the cantons and communes are now less threatened by deficits. As
Chart 3 shows, the situation was reversed toward the end of the 1970s, in light of the observation that the cantons and
communes became indebted following the oil crisis, while the Confederation continued to record surpluses. The
Confederation now shoulders over half of the public debt (53.4% of GDP in 1998). 106 Commission on Fiscal Imbalance CHART 3
CHANGE IN BUDGET SURPLUSES AS A PERCENTAGE OF REVENUES
Confederation Cantons Communes Total Source: Office fédéral de la statistique (1999: 462). Given the overlapping in federal and cantonal finances, it is hard to ascertain the extent of fiscal imbalance in
Switzerland. What is important from the standpoint of autonomy is the freedom the cantons enjoy to make independent
budget choices. This freedom is not entirely the same as regards expenditures and revenues. In terms of expenditures,
the cantons are closely tied to federal budget choices (Braun et al. 2000). A large part of their revenues come from
transfers, which, contrary to those in Germany, for example, are for the most part tied to the accomplishment of certain
responsibilities. Having said that, the Confederation has fairly limited means of controlling the allocation by the cantons
of these resources and often confines itself to a political denunciation in the event of overly free implementation (Linder
1987; Wälti 1996). As for revenues, the link is not as strong.
The only truly “shared” tax is direct federal tax, which is levied by the Confederation on income and of which the cantons
receive one-third.6 Roughly one-fifth of federal revenues are derived from this tax, whose legal basis must be
renegotiated every four years. The Confederation relies, by and large, on its exclusive right to levy the value-added tax,
now set at 7.5%, and various consumption taxes (tobacco, alcohol, mineral oils, duty on heavy vehicles). The cantons
enjoy considerable fiscal autonomy a...
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