Advanced Search
MyIDEAS: Login to save this paper or follow this series

Taxes or Grants: What Revenue Source for Sub-Central Governments?

Contents:

Author Info

  • Hansjörg Blöchliger
  • Oliver Petzold

Abstract

This paper analyses trends in and driving forces of the revenue composition of sub-central governments (SCG). Between 1995 and 2005 the share of SCG in total government spending increased from 31 to 33%, while the SCG tax share remained stable at around 17%, increasing SCG’s dependence on intergovernmental grants. While equal access to public services is the most common justification for such grants, the grant systems of most countries are much larger than required by equalization. Moreover, rather than smoothing out SCG revenue fluctuations over the cycle, grants often tend to exacerbate them. Finally, there is some evidence that grants reduce SCG tax raising effort, inflate SCG spending and increase SCG deficits and debt. The economic crisis will both sharply reduce SCG’s own tax revenues and – via budget constraints at the central level – increase pressure on the grant system. The crisis could hence help rethink the SCG revenue mix, their tax structure and the size and design of intergovernmental transfers. Impôts ou transferts : quels revenus pour les administrations infranationales ? Ce document analyse les tendances et les déterminants de la composition des revenus des administrations infra-nationales (AI). Entre 1995 et 2005, la part des dépenses des AI dans les dépenses publiques totales a augmenté de 31 à 33%, alors que leur participation aux recettes fiscales restait stable autour de 17%, accentuant de ce fait la dépendance des AI envers les transferts intergouvernementaux. Bien que l’égalité d’accès aux services publics soit la raison la plus souvent invoquée pour justifier ces transferts, les systèmes de transferts sont en réalité souvent bien plus importants que ceux qu’impliquerait la simple péréquation. Par ailleurs, les transferts ont tendance à amplifier plutôt qu’à réduire les fluctuations de revenus au cours du cycle. Finalement, il semblerait que les transferts réduisent l’effort fiscal des AI tout en augmentant leurs dépenses et donc leurs déficits et leur dette. La crise économique en cours à la fois va réduire fortement les impôts propres des AI et – suite aux contraintes budgétaires au niveau central – augmenter la pression sur le système des transferts. La crise pourrait donc inciter à repenser la composition des revenues des AI, la structure de leurs impôts et la taille et le design des transferts intergouvernementaux.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://dx.doi.org/10.1787/223111363085
Download Restriction: no

Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 706.

as in new window
Length:
Date of creation: 03 Jul 2009
Date of revision:
Handle: RePEc:oec:ecoaaa:706-en

Contact details of provider:
Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
Phone: 33-(0)-1-45 24 82 00
Fax: 33-(0)-1-45 24 85 00
Email:
Web page: http://www.oecd.org
More information through EDIRC

Related research

Keywords: fiscal federalism; intergovernmental grants; local tax system; fédéralisme fiscal; transferts intergouvernementaux; impôts locaux;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hansjörg Blöchliger, 2013. "Fiscal Consolidation Across Government Levels - Part 1. How Much, What Policies?," OECD Economics Department Working Papers 1070, OECD Publishing.
  2. Hansjörg Blöchliger & José Maria Pinero Campos, 2011. "Tax Competition Between Sub-Central Governments," OECD Economics Department Working Papers 872, OECD Publishing.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:706-en. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.