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The Municipal Fiscal Equalisation System in Saxony

Author

Listed:
  • Rüdiger Parsche
  • Chang Woon Nam
  • Ingo Wagner
  • Frank Zander

Abstract

The Saxon municipal fiscal equalisation system has recently been re-examined and continuously improved. For example, the 1996 Fiscal Equalisation Law includes the "separate" state grants aimed at supporting activities of lower level municipal administration offices into the general unconditional intergovernmental transfer system in Saxony. According to the judgement of the Saxon Constitutional Court made on the 23 November 2000, the 1997 Fiscal Equalisation Law is incompatible with the Saxon Constitution, since the law does not force the complete equalisation for covering additional local expenditures caused by the legally delegated activities from the state. In other words, additional transfers should be provided by the state for those municipal activities, which are independent of the local tax capacity. In the context of this study the anticipated applications of this judgement on the current Saxon municipal equalisation system are examined (under the particular consideration of the distribution of state grants among different types of municipalities according to the horizontal parallel development of fiscal capacity, the determination of transfer needs according to the municipal size, the equalisation of special fiscal burden, the general management of local budget, etc.). Apart from the basic multiple-regression analyses, some specific sensitivity analyses are additionally carried out to measure the possible effects mentioned above.

Suggested Citation

  • Rüdiger Parsche & Chang Woon Nam & Ingo Wagner & Frank Zander, 2002. "The Municipal Fiscal Equalisation System in Saxony," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 10.
    • Handle: RePEc:ces:ifofob:10
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    File URL: https://www.ifo.de/DocDL/ifo_Forschungsberichte_10.pdf
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    References listed on IDEAS

    as
    1. Chang Woon Nam & Rüdiger Parsche & Matthias Steinherr, 2001. "The Principles of Parallel Development of Fiscal Capacity between State and Municipalities as Useful Benchmarks for the Determination of the Inter-governmental Grants in Germany," European Planning Studies, Taylor & Francis Journals, vol. 9(4), pages 525-537, June.
    2. Rüdiger Parsche & Christian Baretti & Robert Fenge & Steffen Jahn & Erich Langmantel & Chang Woon Nam & Bettina Reichl & Matthias Steinherr & Thorsten Uehlein & Frank Zander, 2001. "Analyses and Further Development of Measuring Municipal Expenditure Needs in Saarland," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 7.
    Full references (including those not matched with items on IDEAS)

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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
    • K30 - Law and Economics - - Other Substantive Areas of Law - - - General

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