System Of Fiscal Federalism Research Articles

Impact of Small and Medium Entrepreneurship on the Spatial Development of Russia

The relevance of the topic is due to the pronounced weakness of the influence of small and medium-sized enterprises (SMEs) on the spatial development of the country. The purpose of the article is to advance in the systematization of the functions of SMEs in the spatial development of our country, to systematize the causes of weakness in the implementation of these functions. The most important of the reasons is due to the fact that the system of SME support created in Russia is inadequate to the needs of this sphere. This is confirmed by the fact that in a number of Russian regions, and in the country as a whole, since 2017, there has been a decrease in the number of people employed both in small (the main group of SME employment) and in medium-sized businesses. The decline is taking place against the background of a significant increase in financial volumes and an expansion of the organizational diversity of support for SMEs. The novelty of the article is the advancement in the systematization of assessments of the implementation of the potential functions of SMEs in the spatial development of Russia; assessment of the spatial dynamics of small and medium-sized businesses in recent years in terms of employment parameters from the point of view of the ability of SMEs to really influence the development of territories; assessment of the state and effectiveness of state support for SMEs at the federal and regional levels; analysis of the relationship between the real possibilities of SMEs and the structure of the Russian economy. As the reasons for the weak influence of SMEs on the development of regions, it was noted that large monopolistic enterprises do not need cooperation with SMEs. In the process of choosing measures and directions of support for SMEs, the position of officials-actors, often irrational, dominates. In the current Russian system of fiscal federalism, regional authorities have little interest in promoting the development of SMEs on their territory.

Бюджетный федерализм и пути его совершенствования в Российской Федерации

The article describes the specifics of Russian federalism and the main directions to improve federal relations in the Russian Federation. Historically, inter-budget relationships have been created as a result establishing the relationships between budget regulators at three levels of management. These relations made it possible to maintain the necessary level of financial and administrative security for each of the subjects of budgetary relations within the territory of a single state. In Russia, the emergence of these relationships took place at the beginning of democratization, which became an integral part of the socio-economic and political development of the state. The creation of a new legal framework contributed to the separation and distribution of budgetary powers between the federal bodies of state authority, bodies of authority in the subjects of the Russian Federation, and local authorities. However, all the positive effects had to be systematized and formalized at the legislative level in the form of a regulatory legal act. This document was supposed to take into account aspects related to the distribution of income revenues to the budgets of the three levels of state planning and management. The system of budgetary relations of the Russian Federation has changed; this was characterized by the allocation of levels of budget planning and the division of roles between the elements of the system. Fiscal federalism is one of the most important components of the federal system of the state. Due to the presence of a properly structured system of fiscal federalism, the state can influence the process of economic growth, to determine the further strategy of development of the financial, economic, and social profile of the regions.

Non-tax Burden Management as a Manner of Increasing Fiscal Competitiveness – The Experience of Bosnia and Herzegovina

In this paper, we analyze the new system of improving fiscal transparency in Bosnia and Herzegovina (BiH) and its ability to contribute to increasing fiscal competitiveness. BiH has a specific system of fiscal federalism and decentralization, with four fiscal jurisdictions of disproportionate jurisdiction. By introducing the fiscal register as a public document, fiscal jurisdictions seek to increase fiscal transparency, discourage the introduction of new non-tax levies, reduce existing non-tax levies and eliminate parafiscal levies. In this paper, we investigated whether the new legislation allow for the achievement of these goals. Using the method of qualitative analysis, we concluded that rigorous conditions for entering public tax in the fiscal register and the legal provision that there is no obligation to pay any public tax if it is not entered in the fiscal register are a realistic basis for increasing fiscal transparency. A higher level of fiscal transparency should strengthen the interest of businesses and citizens in the non-tax burden and increase pressure on the government to reduce it. In order for a higher level of fiscal transparency to have an impact on increasing fiscal competitiveness, reforms of government institutions and changes in the way public money is spent are necessary.

The role of fiscal coordination and partisanship in the Spanish fiscal federalist system

ABSTRACT During the euro crisis, the sustainability of Spain’s debt burden was called into question. By 2019, however, Spain had successfully navigated its own crisis and reduced its debt burden. What role did Spain’s emerging fiscal federal system play in this recovery? We analyze the performance of Spain’s fiscal federalist framework and how it affected the country’s budgetary balance, with a special emphasis on its coordination and on political relationships within the autonomous regions. Contrary to what advocates of the benefits of fiscal coordination argue, we find that coordination does not prevent the erosion of fiscal discipline in regions. Our results show that politics, rather than fiscal rules and frameworks, play an important role and have led to differing fiscal performance. In regions where incumbents were re-elected, coordination is employed to ensure more positive budgetary balances. Conversely, in regions with changing incumbents, coordination serves as an indicator of future fiscal problems.

FORMATION OF AN EFFECTIVE SYSTEM OF FISCAL FEDERALISM IS A STRATEGIC FACTOR IN THE DEVELOPMENT OF THE RUSSIAN ECONOMY

The problems of formation of an effective system of fiscal federalism in modern Russia are considered. For a number of objective and subjective reasons, inter-budgetary relations between the federal center and the regions are based on an obvious priority in favor of the interests of the federal center. This has an extremely negative effect on the socio-economic development of the country's regions. The article presents an overview of scientific studies devoted to determining the need to use fiscal federalism as a strategic factor ensuring the effective development of the country's regions. The system of fiscal federalism in the USA and Germany, its advantages and disadvantages is analyzed. The author notes that the experience of these countries confirms the need to use fiscal federalism in countries with a large territory and significant differences in the level of economic development between regions. Ensuring the competitiveness of the region and its transition to an innovative development model can become a reality only if the regions, firstly, have the necessary financial resources for this; secondly, if they are independent in making decisions on determining the direction of using these resources. When the system is conserved, when the region is strategically dependent on the opinion of the federal center, it is a dead-end option. The economic situation in the Udmurt Republic is analyzed, which is a typical example of an industrial region in the Urals. In the current century, three programs for the development of the regional economy have been adopted. However, the practical implementation of the programs ran into great difficulties, since Russian regions are unable to ensure the solution of current problems and development for the future due to the lack of the necessary financial resources. In these conditions, the formation of a modern effective system of fiscal federalism should be considered as a problem requiring a mandatory prompt solution. The socio-political situation in the country and the prospects for its development are determined by the state of affairs in the regions. Therefore, the development of fiscal federalism acts as a strategic condition for the development of the national economy as a whole.

Value Added Tax and Fiscal Federalism in Ethiopia

Crucial to the success of any federal state is the fiscal viability of the central government and component federal states. A feature common to most federal systems is the collection of greater revenues by the central government and reliance by states on transfers from the central government in addition to locally imposed taxes to fund budget expenditures. As is the case in many other federal jurisdictions, in Ethiopia the value added tax (VAT), a tax levied on business sales but ultimately borne by consumers, is an important source of central government revenue. As is also the case in many federal jurisdictions, an assignment of a portion of central government VAT revenues to states is one of the main sources of transfer payments by the central government to state governments in Ethiopia. However, the Ethiopian version of fiscal federalism differs significantly from that found in most other jurisdictions in three key design features – the division between the central and state governments of responsibilities to administer the VAT, the basis on which VAT revenues are divided between the central government and the state governments, and a peculiar design feature that results in tax collections by one state government to be offset by tax reductions suffered by another state government. All three features are cause for concern. The division of administrative responsibility undermines the goal of comprehensive uniform tax administration. The basis for division of tax revenues, a distinction built on the legal form of businesses, leads to assignments of VAT revenue unrelated to fiscal needs. And, most importantly, the odd design feature – the assignment of revenues from the VAT, intended to be a tax on consumers, to the state in which the seller is located rather than the state of the buyer – results in effective cross subsidies when businesses located in wealthier states sell goods and services to businesses operating in poorer states. This article provides a history of the Ethiopian regime and explores how the unique features of the Ethiopian fiscal federalism system arose. It suggests a system that divides revenue on the basis of a fiscal equalisation formula that divides VAT revenues on the basis of relative budget needs of states or a system that allocates revenue to the state in which the customer is located would yield a fairer outcome than the current system. It concludes with modernisation of the tax administration coupled with the adoption of a fiscal equalisation formula for distributing VAT revenues and a generous transitional system for transition to this regime would yield the optimal path going forward.

Tax capacity in the system of fiscal federalism and promotion of regional development

Subject. The article discusses the role of tax capacity in the management of inter-budget relationships. Objectives. The article aims to build and develop a qualitatively new motivational model to encourage Russian constituents to increase their tax potential by ranking them in socio-economic development groups. Methods. For the study, I used the methods of comparative, vertical and horizontal analysis, and statistical groupings. Results. The article clarifies that the mechanism for providing financial or other support to regions with the best tax potential is not working well because the economically developed territories have a higher rate of tax capacity and will always be ahead of the less developed ones. However, that could not be a significant growth rate in the main macroeconomic indicators, since a certain level of development has already been achieved. Conclusions. The article reckons that it is necessary to rate the regions by group of social and economic development and identify leaders with the best tax potential value in each group. This can help to develop an effective system of budgetary allocation and stimulating the regions' tax potential development.

A Comparative Study of Fiscal Federalism in Nigeria, the United States of America and the United Kingdom

The clamour for the adoption of ‘true fiscal federalism’ in Nigeria has been a burning issue in several quarters in the last three decades and has been documented in several articles, amongst which is the empirical study of Arowolo (2011:9). The United States of America (USA) which is the oldest federation in the world, and the United Kingdom – Nigeria’s erstwhile colonial master – were compared alongside Nigeria using qualitative comparative research method. This paper shows that these three countries have a lot of fascinating resemblance and conflicting ideals. For instance, although these three systems of fiscal federalism assign more powers to the central government, the manner in which the exercise these powers varies from one country to the other. Notably, while the Federal system of government in Nigeria exercises control over the natural resources of the devolved units, the devolved unit in the USA maintain control over their natural resources and remit returns to the centre; and in the UK mineral resources such as oil, gas, coal, gold and silver are controlled by the state while others are owned privately. The study, therefore, recommends amongst others that Nigeria should take a clue from the USA and UK system of resource control and fiscal federalism in order to foster national cohesion and promote sustainable growth and development among the federating units.

Fiscal Horizontal Transfers and Fiscal Autonomy in Local Government: Evidence of Public-Private-Partnership influence in Uganda

Drawing on the pure theory of local expenditure and fiscal federalism theory, we investigated whether fiscal horizontal transfers are antecedents of fiscal autonomy in local government. Moreover, it was also examined if public-private-partnerships possibly mediate the fiscal horizontal transfers-fiscal autonomy relationship. In order to test the hypothesized model, data were collected from 27 districts, 9 municipalities and 243 sub-counties scattered in the eastern region of Uganda, East Africa. Over the years, the country has been applauded for its relatively efficient fiscal federalism system in the region. Data were then subjected to both regression and structural equation modeling statistical analysis. Results indicated that fiscal horizontal transfers predict changes in fiscal autonomy and public-private-partnerships have an intervening influence on the fiscal horizontal transfers-fiscal autonomy linkages. Implications to both theory and practice are accordingly discussed and future research path is proposed.

Tax capacity in the system of fiscal federalism and promotion of regional development

Tax capacity in the system of fiscal federalism and promotion of regional development

The Stabilising Role of US Federal Fiscal Institutions — What Lessons for the Euro Area?

The classic argument for a euro area “fiscal capacity”, understood in this contribution as a centralised fiscal stabiliser, revolves around the need to dampen the effects of asymmetric shocks. According to those preaching this conventional wisdom, a common fiscal stabiliser designed along the lines of the US federal fiscal system would have stabilised incomes in member states hit the hardest, thereby avoiding the divergence that has unfolded in the aftermath of the financial crisis between the South, led by Italy and Greece, and the North, led by Germany and the Benelux countries.

The role of subventions in Russian fiscal federalism

The article studies the role of subventions, one of the major types of inter-governmental transfers, in the Russian system of fiscal federalism. The authors demonstrate the structure, dynamics and major trends in the development of subventions over the last 15 years. The new typology of subventions, based on three criteria (financial volume, complexity of the procedure of determining the subvention value, frequency of changes made in these procedures), as well as the detailed classification of the major types of subventions is presented in the article. Finally, the authors draw conclusions on the future of subventions as an element of the Russian fiscal federalism.

Fiscal Federalism in Russia through the Lens of Government Programs Implementation

В последние 20 лет были разработаны и приняты многочисленные правительственные программы и концепции в сфере управления общественными финансами. Цель настоящего исследования определить, насколько реализация данных документов способствует или препятствует развитию бюджетного федерализма, а предмет исследования соответствие формально заявленных в них целей и задач реальному состоянию дел в бюджетной сфере. В основу методологии данной статьи положен дескриптивный статистический анализ основных параметров бюджетной системы, а также сопоставление проблем, задач и результатов выполнения правительственных программ и концепций. В исследовании определены основные тренды в развитии межбюджетных отношений на современном этапе, выявлены противоречия в формулировках целей и задач правительственных документов, проведен содержательный анализ индикаторов, впервые появившихся в Государственной программе 2014 года. Ключевые слова: бюджетный федерализм, бюджетная система, правительственные программы, целевые индикаторы.

Environmental tax and regional government consumption expenditure in a fiscal federalism system

The increasing attention to climate changes have led national Governments to design environmental tax policies able to face environmental problems and their associated economic consequences like as a negative change of GDP. The environmental taxation in particular is considered a powerful instrument of pollution control. More important, it provides public revenue that can be recycled at local level in order to attain the regional double dividend in a fiscal federalism framework. In this respect, we use a Computable General Equilibrium (CGE) model with imperfect labour market, to assess the regional effects of an environmental fiscal reform designed with the aim of reducing the CO2 emissions in a fiscal federalism setting. In particular, we introduce a local green tax on commodities output with a progressive structure. The tax burden depends on the commodity polluting power. According to fiscal federalism principles the tax revenue is collected by the local Government and it is entirely recycled to finance the local consumption expenditure. The application is done on a bi-regional Social Accounting Matrix for Italy and the results highlights the distributional effects of the reform on macroeconomic variables into the bi-regional income circular flow.

What About the Losers in the Race to the Top?

This paper examines the claim that local officials ought to maximize property values and its corollary, the link between resources and location. It argues that, from the standpoint of democratic governance, the most important criterion by which any institutional arrangement should be judged is the degree to which it promotes citizen engagement and participation in the management of the polity. It tentatively concludes that, from this standpoint, our idiosyncratic system of fiscal federalism appears to work fairly well in general and specifically with respect or the governance of public education.

Fiscal Federalism and European Health System Decentralization: A Perspective

How does fiscal decentralisation affect the development of a health system? Evidence from health care decentralisation in Europe can offer some insights to the question above. This paper addresses the effects of health care decentralisation in Europe, and reviews some of the key questions on the design of a health system. We argue that contrary to old mobility argument, the effects of health care decentralisation result from tighter political agency, which generally stands as an alternative to health care privatisation. However, whether efficiency improves after a process of decentralisation depends heavily on the incentives fiscal design exerts on cost –containment, inter-jurisdictional competition, policy innovation and diffusion. Experiences of health care decentralisation highlight important concerns associated with vertical imbalances and limited horizontal imbalances. Finally, health care decentralisation can give rise to a new regional political cycle where citizens can reward or penalise the performance of health policy.

Fiscal Federalism Amid Institutional Weakness: The Argentine Fiscal Pacts of the 1990s

This article provides a political‐economic evaluation of the Argentine federal fiscal system during the 1990s. It describes and analyzes the innovations made to the rules governing the intergovernmental fiscal game, with a focus on the important fiscal landmarks of that decade, namely the fiscal pacts of 1992, 1993, 1999, and 2000. The record shows that many of the reforms to the fiscal regime have involved extensive political horse‐trading and have been inefficient from an economic standpoint and that the level of players' compliance with fiscal pact clauses has been low. The main obstacle to crafting a more economically rational federal fiscal system rests on the overall institutional framework within which political exchanges take place. This weak institutional setting provides powerful incentives for players to focus on the short term and aggravates collective action problems by fostering a static and narrow conception of self‐interest, divorced from the overall (dynamic) coherence of the fiscal regime.

Effects Of The New System Of Fiscal Federalism On Local Economic Development Efforts A Test Case

Although Congress has never officially endorsed President Reagans plan for a New Federalism, it is apparent that our system of fiscal federalism has undergone massive changes in recent years with Federal grants as a percentage of state and local own revenue falling since 1978 on a yearly basis. This paper considers the impact of the changing fiscal federalism upon local economic development efforts using South Bend, Indiana, a rather typical community in the manufacturing belt as a case study.

Russian Fiscal Federalism under Stress: Federal Support of Regions during the Global Financial Crisis

A former high-ranking Russian Ministry of Finance official examines the consequences of financial support extended to regions by the Russian Federation government during the global financial crisis in 2008-2010, for the purpose of exploring its potential impact on the regions' financial health in 2011-2012. The paper is structured around an analysis of the three major dimensions of that support: (1) legal and administrative actions undertaken at the federal level to reduce financial pressure on the regions; (2) increased issuance of intergovernmental fiscal grants in 2009; and (3) loans granted to the regions from the federal budget. The author argues that the financial crisis has provided a "stress test" that is useful in assessing the efficiency and flexibility of the Russian system of fiscal federalism.

Subnational Bailouts in Germany

This paper presents an investigation of subnational government bailouts in Germany. In the first part we briefly describe the system of fiscal federalism in Germany. The main part of the paper examines the bailout of two West German states. We identify the causes of the financial crisis in both states and examine the institutional settings as well as the ruling of the Constitutional Court that forced the federal government to provide bailout transfers. In addition, we investigate the impact these transfers had on the fiscal performance of both states. In a further section we provide evidence on bailouts of local governments by German states. A final section summarizes our results and presents policy conclusions.