Lessons from Spain, Germany and Canada
Studies in Fiscal Federalism and State–local Finance series
Edited by Núria Bosch and José M. Durán
Chapter 3: Tax Assignment and Tax Autonomy in OECD Countries
1 Hansjörg Blöchliger 1 INTRODUCTION Tax autonomy is part of the institutional arrangement – such as responsibility and revenue assignment – in which the diﬀerent levels of government operate. A common way to compare and assess tax autonomy is the extent to which resources and responsibilities are under the control of local and regional governments. Sub-central governments’ (SCGs) tax and expenditure indicators (or ‘decentralization ratios’) can help to assess ﬁscal decentralization and its evolution over time, and give a ﬁrst impression of how much power SCGs enjoy. The following ﬁgures show the current state of ﬁnancial decentralization as measured by sub-central government shares of total tax revenue and expenditure in OECD countries (Figure 3.1) and the evolution of these indicators over the last decade (Figure 3.2). The stylized facts shown by these ﬁgures can be summarized as follows: ● ● The degree of decentralization varies greatly across OECD countries. While the sub-central share of total government expenditures varies from less than 6 per cent to more than 60 per cent, taxes accruing to sub-central governments extend between 3 and 50 per cent. The constitutional background of a country – whether it is federal or unitary – says little about actual ﬁscal autonomy. Local governments in some unitary countries have a higher share in public spending than local and regional governments together in federal countries. The sub-central tax share and the sub-central expenditure share have diverged over the last ten years. While the share of sub-national expenditures generally increased, local taxing power – with a...
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