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The future appropriateness of the revenue sharing between different groups of municipalities in Saxony

Author

Listed:
  • Alexander Eck
  • Joachim Ragnitz
  • Johannes Steinbrecher
  • Christian Thater

Abstract

Study commissioned by the Saxon State Ministry of Finance. In Saxony all municipalities and counties are required to provide certain services independently at their own expense. In order to accomplish these tasks the jurisdictions raise own revenues and may also receive transfers from the state. The size and allocation of the transfers is computed according to a specific revenue sharing scheme. Central to this scheme is that a certain level of equality between the revenues of different groups of municipalities is achieved. The amount of transfers a municipality receives may be influenced by the local demographic developments. The study considers how well the current revenue sharing scheme is able to account for diverging demographic developments in the municipalities. Both shrinking and ageing populations may influence the municipalities’ needs for transfers in order to provide a sufficient level of service. The central goal of this study is therefore to determine whether and how the current equalization scheme needs to be adjusted to account for such population changes.

Suggested Citation

  • Alexander Eck & Joachim Ragnitz & Johannes Steinbrecher & Christian Thater, 2012. "The future appropriateness of the revenue sharing between different groups of municipalities in Saxony," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 67.
    • Handle: RePEc:ces:ifodrs:67
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    References listed on IDEAS

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    1. Alexander Eck & Johannes Steinbrecher & Christian Thater, 2012. "Zukunftsfestigkeit des Gleichmäßigkeitsgrundsatzes II im kommunalen Finanzausgleich des Freistaates Sachsen," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 19(04), pages 22-30, August.
    2. Alexander Eck, 2013. "Der Zensus 2011 und der Gleichmäßigkeitsgrundsatz II im kommunalen Finanzausgleich des Freistaates Sachsen," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(04), pages 34-36, August.
    3. Alexander Eck & Carolin Fritzsche & Jan Kluge & Joachim Ragnitz & Felix Rösel, 2015. "Fiscal Capacity and Determining Structural Characteristics of the Eastern German Laender," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 76.

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    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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