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Unformatted text preview: s, one “concerning the refinancing of
the communities and the broadening of the tax jurisdiction of the regions” and the other “concerning the transfer to the
regions and communities of various fields of jurisdiction.” Less than six months later, in July 2001, the draft legislation
was voted on in the House of Representatives and the Senate.
This study focuses on the section of the Lambermont agreement that deals with the reform of the financing act in order
to highlight the balance achieved by the parties involved in the negotiations.
The study is divided into three sections, devoted to the refinancing of the communities, the fiscal autonomy of the
regions from the standpoint of personal income tax, and the fiscal autonomy of the regions as regards regional taxes.
Each section includes a historical review of the financing mechanisms in effect up until now and a summary of the
circumstances that led to new negotiations. Next, we review the contents of the agreement and assess their budgetary
effect in respect of all of the entities concerned. Such an analysis allows us to draw a number of conclusions on the
content and form of this new institutional reform.
A preliminary remark is necessary. In this study, we cannot overemphasize the description of the transitional
mechanisms included in the special financing act of 1989. The legislation stipulated two types of transitional
mechanisms, one centred on a contribution by the federated entities to efforts to put the budget in order and the other
ensuring a gradual shift from a financing system based on needs to a financing system based on means, i.e. the
derivation (or territoriality) principle of taxation. The details of these transitional mechanisms are complex and now
obsolete. Consequently, we do not believe that a description of them would contribute significantly to the debate at hand.
For this reason, we have decided to emphasize only the components of the permanent phase of the special financing
act that shed light on what is at stake with regard to the Lambermont reform. Readers are encouraged to consult the
bibliography for historic references. 2. REFINANCING OF THE COMMUNITIES 2.1. Background
The special financing act of January 16, 1989 was intended, among other things, to settle the question of the financing
of the communities, to which new fields of jurisdiction had been transferred pursuant to the special act of August 8,
1988. This special act, which is still in force, precisely defines the mechanism governing financial transfers organized
between the federal and community governments. Starting in 1989, provision was made to adopt a new act in 1999 in
order to define new criteria governing the apportionment of funds between the communities, which was to apply starting
in the year 2000. However, in 1993, it was necessary to revise the special act, essentially to bail out the communities
and bolster financial transfers among French-speakers in favour of the French-speaking community. This section
reviews the contents of the statutes, in chronolog...
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