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Fiscal Federalism

Fiscal Federalism. EURAC, Bolzano, Italy 1 October 2008 D J Brand. Fiscal Federalism. Agenda Basic concepts Multi-disciplinary approach Principles Conceptual framework Resources Recent developments in SA Italy – some reflections. Fiscal Federalism.

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Fiscal Federalism

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  1. Fiscal Federalism EURAC, Bolzano, Italy 1 October 2008 D J Brand

  2. Fiscal Federalism Agenda • Basic concepts • Multi-disciplinary approach • Principles • Conceptual framework • Resources • Recent developments in SA • Italy – some reflections

  3. Fiscal Federalism • Ambrogio Lorenzetti: "Effetti del buon governo" - particolare (Siena)

  4. Fiscal Federalism Basic concepts • Unitary, federal, confederal systems • Integrated/cooperative federalism vs competitive federalism • Asymmetric federalism • Financial intergovernmental relations • Fiscal gap • Financial equalisation

  5. Fiscal Federalism Multi-disciplinary approach • Constitutional basis – rule of law/Rechtsstaat • Economic considerations • Political context

  6. Fiscal Federalism Principles • Efficiency • Accountability, good governance • Autonomy • Subsidiarity • Fiscal equivalency • Bundestreue

  7. Fiscal Federalism Conceptual framework • Economic and fiscal considerations • Policy considerations • Constitutional allocation of financial resources and expenditure functions • Principles of expenditure allocation • Principles of tax allocation • Revenue sharing or financial equalisation mechanisms • Constitutional and other legal provisions • Financial and fiscal legislation • Institutional arrangements • Role of the courts

  8. Fiscal Federalism Resources • National/federal treasury • www.treasury.gov.za • Provincial/regional governments (treasury) • www.regioni.it • Constitutional institutions, e.g FFC • www.ffc.co.za • Independent institutions, think-tanks, e.g. Ifo Institute for Economic Research (Germany) • www.cesifo-group.de/portal/page/portal/ifoHome • Courts, e.g German Bundesverfassungsgericht • www.bundesverfassungsgericht.de

  9. Fiscal Federalism South Africa – current issues • Improving public financial management • Provincial spending focus on poverty reduction and inequality • Limited own provincial revenue • Lack of sufficient administrative and management capacity in government • Provinces and local government policy review

  10. Fiscal Federalism Italy – some reflections • New constitutional framework since 1999 • Asymmetric federalism • Special financial arrangements for special regions • Constitutional amendments in 2001 • Strengthening fiscal autonomy

  11. Fiscal Federalism • The heart of fiscal federalism lies in the proposition that the policies of the Allocation Branch should be permitted to differ between states, depending on the preferences of their citizens. The objectives of the Distribution and Stabilisation Branches, however, require primary responsibility at central level. Richard Musgrave, The Theory of Public Finance (1959)

  12. Fiscal Federalism • A compromise is the art of dividing a cake in such a way that everyone believes he has the biggest piece. • Ludwig Erhard (German economist and politician)

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