Does deepening fiscal decentralization decrease cultural finances?

Abstract

ABSTRACT Fiscal decentralization is being promoted to increase the proportion of local consumption tax for local governments and the scale of local income tax. As this situation is predicted to increase the autonomy and responsibility of local government finances, pre-emptive preparations for sectoral financial management are required. Local governments’ increased autonomy in financial management is an opportunity to promote policy projects for the promotion of local culture and arts, and subsidies in the field of culture are considered subordinate to health, welfare, and education. If financial decentralization is promoted, there is concern that cultural finances may shrink. Previous research has not deeply discussed fiscal decentralization and cultural budgets. We propose appropriate fiscal levels based on econometric evidence. we analysed though OLS, WLS, FGLS the effect of the level of fiscal decentralization on cultural expenditure, in OECD countries. As the level of fiscal decentralization increases, cultural budget expenditures appear to increase. However, it decreases when cultural spending exceeds 3%. Consequently, we suggest policy implications for government organizations involved in promoting arts and cultural policy.