Fiscal Federalism

The EU Budget and its Conditionalities*

Abstract

Conditional grants are also often seen as an instrument to reduce constituent units’ policy autonomy in federal systems. Conditional grant programmes also play an important role in policy-making in the EU. Cohesion Policy as an example of an EU public policy which has experienced a significant rise in conditionality instruments over recent decades. However, their use is controversial, as not all member states are affected by the set conditions in the same way which may undermining solidarity. Especially in federal and decentralised countries the autonomy of constituent units has been progressively limited. The constituent units are the main beneficiaries of EU cohesion policy, but they are not involved in decision-making on conditionalities and cannot be held accountable for compliance with all of them.

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Posted by Mario Kölling in Case Studies, Policies, 0 comments

Building Trust and Foundations for Fiscal Federalism in Conflict-affected Somalia

Abstract

Somalia is a federal country with established Federal Member States (FMS). In the absence of a finalized constitution, a political settlement over power and resource allocation is lacking, leading to extra-constitutional negotiations.  A nascent federal system with a provisional constitution poses major constraints on the functioning of the government and citizens’ trust.  This includes inter alia the inability to provide services across the jurisdictions, conflict over limited resources, constrained human resources, election disputes, limited understanding of federalism, corruption, and clashes. A political settlement would help Somalia’s stabilization and sustainable development. The current political leaders have created avenues for political negotiations that help reach consensus on contentious issues. These avenues are laying the foundation for political dialogue, leading to compromise on many unresolved issues that are proving successful and a model for post-conflict settings.

 

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Posted by Mohamud Yasin in Case Studies, 0 comments

Concessionary Federalism as a Tactical Choice to Facilitate Constitutional Change—A Lesson from India’s Indirect Tax Reforms

Abstract

One of the key questions of research on federalism is to understand the conditions or causal mechanisms under which constitutional change—that reallocates powers between the centre and the states– becomes feasible in federal systems. However, the literature on federalism offers limited guidance on how to persuade subnational states to adopt amendments which seek to diminish their constitutionally assigned powers—especially their tax authority, which is a primordial feature of their institutional empowerment—without violating democratic decorum and federal principles. The case of indirect tax reforms in India assumes significance in this context. It adds important insights to the debate on how best to understand the circumstances under which the proposals to amend the constitutional division of powers enter the political agenda and the conditions under which they fail or are finally adopted.

 

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Posted by Chanchal Kumar Sharma in Case Studies, 0 comments

Where does financial responsibility lie? Emerging paradigms from a comparison between Germany and Spain

Abstract

Financial responsibility traces the academic and political debate of any decentralising process. This is even more so in the European context, in which taxes – exclusively set and regulated by the subnational legislator – play a marginal role in subnational financing, though in theory they are the most genuine instrument for making SNGs pay for their decisions. Against this framework, this contribution delves into a selection of case studies (i.e., Germany and Spain) testing the principle of financial responsibility from a comparative and legal perspective. The basic assumption is that the way in which the vertical fiscal gap is addressed influences the degree of financial autonomy (and hence responsibility) of subnational entities. As such, the major issue at stake is the revenue structure of the subnational level of government, with regard to the legal tools and procedures devoted to revenue-sharing, as these elements play a key-role in defining the extent to which SNGs are made financially and politically responsible for their financing.

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Posted by Alice Valdesalici in Theory, 0 comments
Rebalancing Federal Citizenship in Canada

Rebalancing Federal Citizenship in Canada

Abstract

In multinational federations, tensions around national identities, rights and entitlements, and power-sharing arrangements are endemic and never finally resolved. In Canada, simultaneous constitutional and fiscal crises in the 1990s brought into question the legitimacy of the ‘federal bargain’ at the core of the citizenship regime. The federal government’s response was to introduce a number of institutional, programmatic, fiscal and symbolic reforms that adjusted the delicate balance between national unity and the accommodation of diversity. This pragmatic political vision, replete with certain asymmetries and ambiguities, enabled Canada to rebuild and rebalance its way to its own unique shade of federalism.

 

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Posted by James Bickerton in Case Studies, 0 comments
The Pleasant Greyness of Australian Federalism

The Pleasant Greyness of Australian Federalism

Abstract

This article provides an overview of Australian federalism, describing its origins, design, features, evolution, and issues. Its central theme is the way that, in the notable absence of a ‘federal society’, a system that was decentralised in design and intent has given way to one much more centralised in practice. The issues that plague Australian federalism are the practical ones of fiscal federalism and intergovernmental relations.

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Posted by Alan Fenna in Case Studies, 0 comments
The Union Model of Indian Federalism

The Union Model of Indian Federalism

Abstract

The Founding Fathers provided India with a Union Constitution and a model of federalism, which is now distinctively know as a ‘union model of federalism’. It distinctively harmonises otherwise opposite processes of (i) centralisation-decentralisation; (ii) autonomy-integration, and unionisation- regionalisation. The degree of federalism varies from Article to Article and from one context to another. One finds a consistency in the relative degrees of centralisation and decentralisation. Powers are distributed in a manner as to promote federal nationalism and regionalism, besides being an ethnically responsive federal polity. With the introduction of Goods and Services Taxes (GST) and the National Institution for Transforming India (NITI Aayog) and growing salience of subject specific regulatory bodies, Indian federalism is gradually shifting towards a system of national governance, which I have termed ‘National federalism’. This contribution succinctly analyses these aspects of Indian federalism.

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Posted by Ajay Kumar Singh in Case Studies, 0 comments