Unformatted text preview: endence of the Cantons on transfer payments from the federal government and of the communes on transfer
payments from the Cantons. This is observed in table 8 from the percentage of the various categories of revenue for the
three levels of government.
♦ In 1998, the Cantons received only 24 per cent of their revenues from the Confederation (7 per cent from revenue sharing
and 17 per cent in the form of conditional grants). The net "tax / transfer payments" ratio, as KING observed (1984, p. 185),
was 2.0, whereas the "own resources / transfer payments" ratio was 2.8. These ratios give some idea of the independence
of cantonal finance on federal transfer payments. They are slightly higher than those computed by KING for Canada and
USA. The usual interpretation is that the Swiss Cantons do not depend much on federal payments and benefit from a fairly
high degree of fiscal autonomy. ♦ The communes received only 16 per cent of their revenues from the Cantons in the form of revenue sharing (3 per cent)
and grants (13 per cent). Although these proportions were about 5 percentage points below for the cantons as well as for
the communes in the early eighties, the actual figures do not represent a very high degree of financial dependence
compared to other OECD countries. And in any case, these proportions contrast with the degree of centralisation in public
expenditures, which is much higher because the agency role of decentralised governments has gained in importance
during the last decade compared to the "choice" model. 3.4.4. Tax administration In principle, each level of government and each government within a same level may have its own tax administration.
Thus the Cantons have a legal obligation to collect the federal direct tax (FDT) on individual income, corporate profits
and capital and on capital gains. They also participate in managing the federal withholding tax and stamps duties. But
since there are 26 cantonal tax laws and as many tax administrations and no tutelage of the federal government over
State and local tax administration, there exist 26 ways of managing the cantonal taxes and the FDT. In order to gain
economies of scale in the tax administration and coherence in the tax practice, many formulas exist for co-operation
between the three tiers of government.
In addition, because the powers of the State tax administrations are limited to the territorial area of the State to which
they belong, whereas economic activities may spill over cantonal limits, a decentralised tax administration creates
problems and conflicts. These have been solved in the first place by negotiations between the Cantons, eventually (and
more often) through the jurisprudence of the Federal Court of Justice. Secondly, a federal law on the harmonisation of
cantonal direct taxation has been enforced on 1 January 1993 to introduce some order in the Cantons' taxation for
neutrality and equity reasons. Within the following eight years (on the 1st of January 2001 at the...
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