The Forum of Federations Handbook of Fiscal Federalism

Foreword
Introduction
Contents
Notes on Contributors
List of Figures
List of Tables
Australia
	1 Overview of Australia’s Federal System
	2 The Structure of Government and Expenditure Responsibilities
		2.1 Commonwealth Power of Expenditure
		2.2 Commonwealth Power to Grant Funds to States
	3 Taxation in the Australian Federation
		3.1 Commonwealth Taxing Power
		3.2 State Taxes
			3.2.1 Why No State Income Taxes?
			3.2.2 Why No State Sales Taxes?
		3.3 Local Government
	4 Federal Economic and Fiscal Coordination
		4.1 National Economic and Debt Management
		4.2 From The Council of Australian Governments to the National Federation Reform Council
		4.3 The Intergovernmental Financial Agreement
	5 Horizontal Fiscal Equalisation
		5.1 History of Equalisation and the Commonwealth  Grants Commission
		5.2 The “Reasonable Equalisation” Approach and Top-Up for Western Australia
		5.3 Lack of State Tax Reform
	6 Vertical Fiscal Imbalance
		6.1 Australia’s High Vertical Fiscal Imbalance
		6.2 Reforming the GST
		6.3 A New Approach to Revenue Sharing Between the Commonwealth and the States
			6.3.1 Inspiration from the German Revenue Sharing System
			6.3.2 Establishing the Income Tax and GST as “Joint Taxes” in Australia
			6.3.3 Towards Limited Sharing of the Income Tax Base?
	7 Federal Fiscal Policy for Indigenous Self-Government
		7.1 Australia’s Failure to Recognise Indigenous Fiscal Self-Government
		7.2 Inspiration from Canada for Recognising  Indigenous Fiscal Self-Government
	8 Future Directions
	References
Brazil
	1 Introduction
	2 The Structure of Government and the Assignment of Resources and Responsibilities
	3 Intergovernmental Transfers and Fiscal Disequilibria
	4 Fiscal Federalism and Macroeconomic Management
	5 Challenges to Fiscal Federalism: Institutional Rigidity, Conflicts and Impediments to Reform
	References
Canada
	1 General Features of the Country
	2 The Allocation of Expenditure Responsibilities
	3 Taxation Powers
	4 Intergovernmental Fiscal Transfers
		4.1 Equalization
		4.2 Specific-Purpose Federal Transfers to Provinces
		4.3 Territorial Formula Financing
		4.4 Provincial Transfers to Municipalities
		4.5 Vertical Fiscal Gaps
	5 Macroeconomic Management
	6 Response to the Covid-19 Pandemic
	7 Challenges to Canadian Fiscal Federalism
	References
Ethiopia
	1 Introduction
	2 Federalism in Ethiopia
	3 The Structure of Government
	4 Social and Economic Development
	5 Allocation of Expenditure Responsibilities
	6 Taxation Powers
	7 Intergovernmental Fiscal Transfer and Revenue Sharing
	8 Macroeconomic Management
	9 The Ethiopian Federal System and Response to Pandemics: Lessons from Coronavirus
	10 Concluding Remarks
	References
Fiscal Federalism in Germany
	1 Overview of the Country
	2 The Division of Fiscal Powers
	3 Fiscal Federalism and Macroeconomic Management
	4 (Fiscal) Federalism During the COVID-19 Pandemic
	5 Revenue-Raising Responsibilities
	6 Intergovernmental Fiscal Transfers
	7 The Way Forward
	References
Republic of India
	1 Introductory Overview
		1.1 Legal System
		1.2 Political Parties
		1.3 Social Norms and Restraints
		1.4 Civil Society
	2 Citizens’ Charter
		2.1 Basic Economic Indicators
	3 The Structure of Government and Division of Fiscal Powers
		3.1 System of Governance
		3.2 Division of Fiscal Powers
		3.3 Sharing of Central Taxes
		3.4 Types of Fiscal Transfers in India
		3.5 Union Finance Commission (UFC)
		3.6 Constitutional Status of Local Governments and their finances
		3.7 Finances of the Local Governments
	4 Fiscal Federalism and Macroeconomic Management
	5 Fiscal Equity and Efficiency Concerns and Intergovernmental Fiscal Transfers
	6 Covid-19 Pandemic and Fiscal Federalism
	7 Fiscal Federalism Dimensions of Public Management Framework
		7.1 The Way Forward
	References
Italy
	1 Balancing an Inverted Pendulum:  Basic Data and Facts
	2 Framing Regional Economies: A Look Back and Forth
	3 Explaining “Federal” Regionalism: Determinants and Their Implications
	4 Discussing the Rules of the Game: The Allocation-Scheme
	5 Discussing the Rules of the Game:  Spending Autonomy
	6 Discussing the Rules of the Game: Taxation Responsibilities
	7 Discussing the Rules of the Game: Intergovernmental Fiscal Transfers and Revenue-Sharing
	8 Assessing Recent Trends: The Persistent Lack of Coordination
	9 Evaluating the Covid-19 Outbreak Phase:  The Ultimate Stress Test
	References
South Africa
	1 Introduction
	2 The Structure of Government
	3 Taxation Powers at a Glance
	4 Anatomy of Fiscal Transfers and Revenue Sharing
	5 Macroeconomic and Fiscal Policy Management
	6 Intergovernmental Response to COVID-19 in South Africa
	7 Successes and Challenges of Fiscal Federalism in South Africa
	Annexure A
	References
Spain
	1 Introductory Overview of the Country
	2 The Allocation of Expenditure Responsibilities
	3 Taxation Responsibilities
		3.1 Revenue Assignments of the Autonomous  Communities: The Common Regime
		3.2 Revenue Assignments of the Autonomous  Communities. The Charter System
		3.3 Revenue Assignments of Local Governments
	4 Intergovernmental Fiscal Transfers and Revenue-Sharing
		4.1 Transfers to Regional Governments
		4.2 Transfers to Local Governments
	5 Macroeconomic Management
	6 Challenges to Fiscal Federalism
	References
Switzerland
	1 Introduction
	2 Switzerland: Facts and Figures
	3 The Structure of Government and the Division of Fiscal Power
		3.1 Federal Scope of Responsibilities and Its Evolution
		3.2 Issues with Centralization
	4 Fiscal Federalism and Macroeconomic Management
	5 Fiscal Rules and Referenda
		5.1 Favorable Evidence on Budget Rules…
		5.2 …and Fiscal Referenda
	6 Public Revenue
		6.1 Cantons Exploit Tax Autonomy
		6.2 Largely Benevolent Tax Competition
		6.3 Corporate Tax System Under Change
	7 Redistribution Framework
		7.1 The Widely Successful Reform of the Equalization Scheme
		7.2 Disincentives and Flaws of Redistribution Mechanism
		7.3 The Effect of Direct Democracy and Fiscal Federalism on Income Inequality
	8 Conclusion
	References
United States
	1 Introduction
	2 Revenues and Expenditures
	3 Intergovernmental Grants
	4 Trends
	5 Diversity
	6 Challenges and Future Directions
	Afterword
	References
Comparative Perspectives on Fiscal Federalism Systems
	1 Expenditure Responsibilities
		1.1 Decentralization, Concurrent Responsibilities, and Central Government Influence
		1.2 Distribution of Expenditures
		1.3 Asymmetry in the Allocation of Responsibilities
	2 Taxation Powers and Revenue Decentralization
		2.1 Tax Decentralization and Revenue-Raising Autonomy
		2.2 Asymmetries in Taxation Powers
		2.3 Shared Taxes and Formula-Based Revenue-Sharing
		2.4 Own-Source Revenues of Subnational Governments
		2.5 Natural Resource Taxation
		2.6 Vertical Fiscal Gaps
	3 Fiscal Transfer Systems
		3.1 Subnational Governments’ Reliance on Transfers
		3.2 Equalization
		3.3 Decision-making Process for Transfer Systems and Advisory Fiscal Commissions
	4 Macroeconomic Management
		4.1 Tax Policy Harmonization
		4.2 Restrictions on Borrowing at Subnational Level
		4.3 Fiscal Rules, Coordination, and Fiscal Discipline
	5 Challenges to Fiscal Federalism Systems
	References
Index