Unformatted text preview: zing such principles is the rule, but uniform principles can also be established through horizontal coordination among states. This is
effected in conferences of state ministries and conforming treaties among governments. One prominent example is the cooperation in education and
culture through the Kultusministerkonferenz.
Despite these constitutional provisions, there have been some (successful) incidents of “pork-barreling” between the federal government and some
states with decisive votes, most recently in the context of securing support for the tax reform of the year 2000.
Municipalities are, however, accorded some discretion to set tax rates within predetermined levels.
This provision has worked mainly in favor of the PDS, successor party of the former communists, and hence in favor of East German citizens. Commission on Fiscal Imbalance begins with the formula apportionment of the jointly appropriated VAT onto regions (mainly population based and highly
equalizing); it proceeds through the horizontal redistribution of resources among states according to the Equalization
Law (Finanzausgleich); and is completed through a number of asymmetrical vertical grants by the federal government in
favor of “states in need” however defined, mainly—though not exclusively—to the formerly communist states in East
Germany. This interregional solidarity is pushed to a point where the average command of public resources per capita is
now higher in the “needier” states than in some of the richest states in the West. It is this outcome that has spurred a
constitutional challenge by three more affluent states of Southern Germany: Baden-Wurttemberg, Bavaria, and Hesse.
Thus the issue of solidarity versus subsidiarity was officially raised for the first time, although it had been discussed in
academic circles already for some while. 2. SOLIDARITY VERSUS SUBSIDIARITY: WHAT IS AT STAKE? Solidarity is a „sacred cow“ in Germany—notably as regards the new states of Eastern Germany. This is less for moral
than for political reasons: East Germans have now become the “decisive voter”, more so than the Hispanics in the
United States. The costs of this solidarity are yearly transfers of resources from West to East the volume of which is
enormous: it corresponds to more than twice the official development aid of all industrialized countries to all developing
countries in the world. This by itself has introduced new asymmetries in intergovernmental relations that will continue to
haunt German politics and decide regional economic developments.
Solidarity with East Germans was expected to produce two types of immediate benefits: one political (national
integration and political stability); the other economic (the alignment of productivity levels and employment opportunities
between regions). Ten years after unification, neither of these outcomes has materialized. There is still a large degree of
dissatisfaction in the East, sometimes even restorative political sentiments; and Westerners surreptitiously deplore East
German “ingratitude. The unemployment rate remains twice as high in the...
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