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Fiscal Decentralisation: The Swiss Case

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  • Price Victoria Curzon

    (University of Geneva)

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    Abstract

    Switzerland provides a potential laboratory for testing various hypotheses connected with tax competition because of its extremely decentralized fiscal system. Twenty-six cantons (some of them extremely small) have retained the ultimate power of deciding tax questions, and hence not only to limit the Federal level of the State to about 1/3 of total public expenditure, but also to retain absolute power to set their own levels of taxation. Furthermore, citizens can launch referenda on tax issues at any level of government.Fiscal competition between cantons should therefore be easy to spot, resulting in lower tax cantons enjoying higher economic growth (the “classical” hypothesis), or in a “race to the bottom” with lower tax cantons offering a lower level of public services (the “harmful competition” hypothesis). In fact, neither of these hypotheses is confirmed. This leads the author to suggest a third hypothesis based on public choice theory (politicians in high-income cantons are led to raise high taxes). The author suggests that the classical and the public choice hypotheses cancel each other out, leaving a mixed picture. The article ends with some reflexions on the implications of the Swiss experience for fiscal harmonization at a European level.La Suisse offre un véritable laboratoire pour tester plusieurs hypothèses de concurrence fiscale en raison de son système fiscal extrêmement décentralisé. Vingt six cantons (dont quelques uns très petits) ont conservé le pouvoir suprême de décider les questions fiscales et, donc, non seulement de limiter le niveau fédéral de l’Etat à 1/3 des dépenses publiques totales, mais aussi de conserver le pouvoir absolu pour fixer leurs propres niveaux de taxation. De plus, les habitants peuvent lancer des référendums en matière fiscale à tout niveau du gouvernement.La concurrence fiscale entre les cantons devrait être par conséquent plus facile à repérer, les cantons les moins imposés ayant une croissance économique supérieure (hypothèse classique), ou en un « nivellement par le bas » face aux cantons les moins imposés offrant un niveau inférieur de services publics (hypothèse de “concurrence néfaste”). En fait, aucune de ces hypothèses n’est confirmée. Cela conduit l’auteur à suggérer une troisième hypothèse basée sur la théorie des décisions publiques (les politiciens des cantons à revenus élevés sont conduits à lever des impôts élevés). L’auteur suggère que les hypothèses classiques et celles des décisions publiques se neutralisent l’une l’autre, laissant place à un modèle mixte. L’article se termine par quelques réflexions quant aux implications de l’expérience Suisse pour une harmonisation fiscale au niveau européen.

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    File URL: http://www.degruyter.com/view/j/jeeh.2003.13.4/jeeh.2003.13.4.1108/jeeh.2003.13.4.1108.xml?format=INT
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    Bibliographic Info

    Article provided by De Gruyter in its journal Journal des Economistes et des Etudes Humaines.

    Volume (Year): 13 (2003)
    Issue (Month): 4 (December)
    Pages: 1-20

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    Handle: RePEc:bpj:jeehcn:v:13:y:2003:i:4:n:5

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