Exploring new avenues in comparative federalism research, ecpr congress, helsinki 712 may, 2007 first draft. The final key element of fiscal federalism in canada is the system equalization payments. There is probably no field of swiss policy that is not influenced by the fact that switzerland is a federation. Federalism, especially in large or diverse countries, can also improve service delivery and democratic resilience, ensure decisions are made at. Many of these working papers are outputs of the oecd network on fiscal relations across levels of government. Download as pdf abstract switzerland is often held up as one of the most successful examples of a stable federal system. Randall henning and martin kessler european debates on reform of euroarea fiscal governance frequently refer to fiscal federalism in the united states. In response, the federal government the confederation in collabo ration with. Federal countries differ a great deal in their choices specifically, how the division of fiscal powers is allocated among various orders and the associated fiscal arrangements. Section 3 surveys the empirical literature on the impact of fiscal federalism on growth. We rely on the institutional setting in switzerland to study the issue empirically. As originally developed by musgrave 1959 and oates 1972, the theory of fiscal federalism concerns the division of publicsector functions and finances in a logical way among multiple layers of government king 1984. Fiscal federalism the relative financial positions and the financial relations between the levels of government in a federal system. Federalism is a means of ensuring peace, stability and mutual accommodation in countries that have territorially concentrated differences of identity, ethnicity, religion or language.
For switzerland, with its four national languages and its highly diverse geographical landscapes, federalism makes and important contribution to social cohesion. Fiscal federalism is the analysis of the problems that give rise to, and arise from, the existence of more than one level of government within the same geographical area. As originally developed by musgrave 1959 and oates 1972, the theory of fiscal federalism concerns the division of publicsector functions and finances in a logical way. Emerging lessons from half a century of fiscal federalism. Bird university of toronto the analysis of the problems that give rise to, and arise from, the existence of more than one level of government within the same geographical area. Centre for research on federal financial relations, a. At its most basic level, fiscal federalism attempts to define the division of governmental functions, and the financial relationship between, different levels of.
At each level, we find a separation of powers with the executive, the. The advantages and disadvantages of fiscal federalism are widely discussed in economics and political science. In most instances of legal consideration2, today federalism is actually treated in this way, however, the political sciences have ascribed a somewhat broader meaning to it. Having a fiscal federalism mechanism allows the government to optimize their costs on economies of scale, because in this manner, people will get public service. According to our findings tax decentralization tends to reduce concentration in pre and. Formal federalism or constitutional federalism the delineation of powers is specified in a written constitution, which may or may not correspond to the actual operation of the system in practice.
Fiscal federalism concerns the division of public sector functions and finances among different tiers of government ozoeson, 2005. General economic trends are likely to strengthen central government involvement. As the above facts indicate, the swiss fiscal system is thoroughly noncentralized. Fiscal federalism and accountability within the swiss. Us history for architects of europes fiscal union by c.
Various elements of the swiss budgeting system are described. Reforming federalism in switzerland overview new assignment of tasks and finances in place since 01012008 new assignment of tasks new assignment of costs and finances finetuning by financial equalization in the stricter sense territory reform especially at municipal level reform projects at the upper levels confederation. Oecd ilibrary oecd working papers on fiscal federalism. Fiscal federalism is part of broader public finance discipline. Abstract its highly fragmented structure of local governments and serious horizontal fiscal imbalances make switzerland a surprisingly powerful model for eastern european countries that are currently facing the challenge of fiscal decentralization. The analysis of these new data in a range of projects has generated new and robust evidence on fiscal interdependencies among local governments and on behavioral responses of households facing local differences this article. Basic structures of the federal system as shown in table 1, the swiss federal system consists of three levels.
A comprehensive reform of fiscal federalism is currently being discussed. Fiscal federalism in switzerland can be characterised in terms of overall fiscal restraint. In the last ten years, this has led many scholars to analyze the economic effects of tax competition in switzerland. This means that state powers are divided between the confederation, the cantons and the communes. Relevant issues for transition economies in central and eastern europe. Thomas fleiner professor of public law at the university of fribourg, and director of the institute of federalism, university of fribourg, switzerland. Clarification of functional responsibilities of each state level i. Emerging lessons from half a century of fiscal federalism in switzerland 77 swiss journal of economics and statistics, 2017, vol. Federalism has been of central importance in the governance of switzerland since the founding of the modern state in 1848 and its special place is enshrined in the constitution. However federalism as a core principle in switzerland is sacred and the cantons jealously guard any attempts to limit their freedom. The budget principles are defined by the swiss constitution and have been restated most recently in the 1999 fiscal guidelines of the confederation. Fiscal federalism in the european unionedited by amedeo fossati and giorgio panella. Fiscal federalism in india fiscal federalism refers to the division of responsibilities with regards to public expenditure and taxation between the different levels of the government. Since its creation in 1848, swiss federalism has contributed to the countrys stability, as well as its wealth and prosperity.
The federalist state structure affects everything, as anyone who has been to school in switzerland can confirm. Pdf federalism in switzerland steve mafos academia. Pdf the advantages and disadvantages of fiscal federalism are widely. Its highly fragmented structure of local governments and serious horizontal fiscal imbalances make switzerland a surprisingly powerful model for. Fiscal federalism and european economic integration the pace of economic integration among european union eu member states has accelerated considerably over the past decade, highlighted by the process of economic and monetary union emu. The swiss federal system emphasises the sovereignty of subcentral. Emerging lessons from half a century of fiscal federalism in. The federal constitution lays down the powers of the confederation and the cantons. Improve vertical collaboration between federal and cantonal level steering of shared functions program approach iii. Fiscal federalism and accountability within the swiss system of government raoul blindenbacher1 1. For switzerland, with its four national languages and its highly. Fiscal federalism in swit zerland can be characterized in te rms of overall fiscal restraint and minimizing the centralization of fiscal power. Introduction switzerlands geography and historical development have led to a unique political system among the worlds federal countries. His research interest includes fiscal federalism, decentralization, cal financinglo and budgeting, regional and local development.
In 1815, switzerlands independent political status was confirmed by the congress of vienna, and the swiss confederation was constituted in its present. Relevant issues for transition economies in central and eastern europe bernard dafflon and krisztina toth world bank policy research working paper 3655, july 2005. Fiscal federalism for emerging economies 3 circumstances, because institutions matter. Federalism and fiscal transfers clemens and veldhuis fraser institute 20 canada health transfer cht the canada health transfer cht is the single largest transfer to the provinc es and territories by the federal government. This book offers an overview on recent trends and policies in intergovernmental fiscal relations and subcentral government. While some authors argue that federalism favors individual initiatives and serves as a market preserving device, others emphasize the. It concludes that there is a substantial congruence between what can be viewed as theoretically. Fiscal federalism and european economic integration.
Project have collected data on fiscal federalism in switzerland over more than half a century. In section 4, the swiss tax system is explained in order to demonstrate the importance of sub federal swiss taxing powers. The fiscal relationships between and among the constituents of the federation is explained in terms of three. Schmidb auniversity of freiburg, walter eucken institut buniversity of lucerne, faculty of economics and management, frohburgstrasse 3, 6002 lucerne, switzerland cuniversity of st. Fiscal federalism is characterized by fiscal relations between central and lower levels of government. Current structure of fiscal federalism in nigeriaa legacy of military rule 4.
Fiscal federalism in the uk introduction fiscal federalism is the aspect of federalism which concerns the precise allocation of fiscal powersresponsibilities, i. Importance of federalism generally and in current discussion in a description of the swiss political system, one of the first features mentioned will be federalism. Fiscal federalism, financial relations between units of governments in a federal government system. A small country at the centre of europe, switzerland is surrounded by member states of the european union, without being a member itself. Fiscal federalism in switzerland world bank elibrary. These include direct democracy, federalism, and a traditionsystem of achieving consensus concordance. The analysis of these new data in a range of projects has generated new and robust evidence on fiscal interdependencies among local governments and on behavioral responses of households facing local differences. Its highly fragmented structure of local governments and serious horizontal fiscal imbalances make switzerland a surprisingly powerful model for eastern european countries that are currently facing the challenge of fiscal decentralization. Theoretically contradicting arguments ask for empirical evidence to obtain a better knowledge of this relationship. Can the swiss experience be a model for political strategies in the emerging economies in latin america and other regions of th e world, or is the institutional framework in switzerland so singular that the swiss.
As the name suggests, it is meant solely to support provincial spending for health care. A groining literature is examining the economic effects of tax competition between the 26 swiss cantons. Switzerland also has 26 different codes of procedural law. Swiss federal tax administration, fta and university of st. Related working papers on fiscal federalism issues are also published in other oecd working paper series on tax policy, economics, public governance and regional development. Data and research on tax including income tax, consumption tax, dispute resolution, tax avoidance, beps, tax havens, fiscal federalism, tax administration, tax treaties and transfer pricing. Yet government authority at all levels remains subject to scrutiny by the swiss electorate, and conservative trends have often impeded government action on issues sensitive to switzerlands. The competitive federalism model is a theoretical construct advanced by the fiscal federalism literature and not yet practised anywhere in its pure form. Institute of federal studies until he joined the university of fribourg, switzerland for his phd study in 2008. As originally developed by musgrave 1959 and oates 1972, the theory of fiscal federalism con.
The federation, the today 26 cantons and about 2500 communes elect their own political authorities lutzstrohmann 1998. Currently, he serves the university as the chair person of the centre for federal studies. Schmidb auniversity of freiburg, walter eucken institut buniversity of lucerne, faculty of economics and management, frohburgstrasse 3, 6002 lucerne, switzerland. Its highly fragmented structure of local governments and serious horizontal fiscal imbalances make switzerland a surprisingly powerful model for eastern european countries that are currently facing the challenge of fiscal. A brief tour through the history of nigerian federalism reveals sharp turning points in federal and regional fiscal relations, based alternately on principles of derivation, national interest, and the centripetal forces of military governments3.
Introduction switzerland s geography and historical development have led to a unique political system among the worlds federal countries. A comparative analysis provides a comprehensive survey of the distribution of the taxing authority among different levels of governments of a selection of countries. Fiscal federalism in four federal countries abstract this paper provides a characterization of the fiscal policy framework in four established federal countries with heterogeneous intergovernmental relations and demographic characteristics. Project have collected data on fiscal federalism in switzerland over more. Federalism, which was introduced in switzerland in 1848, makes it possible to enjoy diversity within a single entity. The term was introduced by the germanborn american economist richard musgrave in 1959. Fiscal federalism for emerging economies oxford academic. The article concludes with some principles of grant design and implementation issues.
Canada, germany, switzerland and the united states. Many aspects of the eus apparatus, however, have failed to evolve in order to meet these new challenges. The case of switzerland wolf linder paper prepared for the international conference federalism in a pluralistic developing societies. Curiosities like these lead some people to poke fun at federalism, deriding it as kantonligeist, or little canton mentality. Despite the relative success of swiss federalism, most federal countries follow the principles of coordinated rather than competitive federalism. Introduction switzerland is a small country of 7 million inhabitants surrounded by germany. A typology of grant is presented, as well as an overview of the purposes of grants. Fiscal federalism deals with the division of governmental functions and financial relations among levels of government.
As budget expenditures are issued on a yearly basis by the government, the federal council, and have to be approved by the parliament, they reflect the countrys fiscal policy the budget principles are defined by the swiss. Fiscal federalism is concerned with the public finances of the various orders of government in a federal system. According to this construct, all orders of government should have overlapping responsibilities, and they should compete both vertically and. Federalism a characteristic element of swiss forest policy 1. Institutions of intergovernmental fiscal relations. Notwithstanding the generally accepted success of the swiss experiment with federalism, the swiss themselvescontinue reading. Over the last six years, researchers collaborating through the snf sinergia project have collected data on fiscal federalism in switzerland over more than half a century. Political environment the swiss political system has several distinct features. Introductory remarks from the historical perspective, federalism has originated as one of the forms of internal setup of the state. This paper analyzes the impact of fiscal federalism on income inequality and redistribution.
Fiscal federalism in switzerland thomas fleiner and. The cantons, in turn, define the powers of their communes. Switzerland is one of the most noncentralized countries in the world. Recent developments in swiss federalism professor dr.528 307 1372 53 746 566 1048 723 1004 950 1447 658 283 851 457 567 436 1018 1252 1542 1067 430 1478 114 1265 1075 1033 1251 95 872 374 1109 1322 1171 1007 327