Intergovernmental co-ordination of fiscal policy in Switzerland

Abstract

This chapter describes fiscal co-operation institutions in Switzerland, which go beyond traditional vertical top-down co-ordination. Switzerland is an example of intergovernmental co-ordination of fiscal policy in a highly decentralised country. The country is characterised by a highly fragmented structure of sub-national entities. The cantons (state level) have significant policy, organisational and financial autonomy. Due to the fragmented structure and considerable autonomy, vertical co-operation between the federal and cantonal levels as well as between the cantonal and municipal levels is indispensable. This co-operation is based on the following elements: independent financing of cantonal tasks, fiscal equalisation between financially strong and weak cantons, as well as fiscal assistance between the federal and cantonal levels. In this respect, the role of vertical co-ordination of stabilisation policy and particularly of debt policy is limited. Horizontal co-operation is based mainly on inter-cantonal agreements and conferences.