commission on fiscal imbalance 合集

This provision has worked mainly in favor of the pds

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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 6 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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