Fiscal Efficiency Research Articles

Fiscal Federalism and Fiscal Autonomy: Lessons for the UK from Other Industrialised Countries

The purpose of this article is the following. First, we provide a comparison of the degree of fiscal decentralisation in the UK with that in other countries, and assess the extent to which different areas of public expenditure are assigned to different tiers of government. Second, we assess the degree of fiscal autonomy in the UK compared to that in other OECD countries. We also provide some insights from the theory of fiscal federalism to assess whether the current degree of fiscal autonomy in the UK is optimal, or whether there are useful lessons to be learned from other economies. One key conclusion here is that, although there would seem to be good reasons to increase the degree of fiscal autonomy in the UK, one might want to proceed with caution. We also discuss whether other OECD countries offer useful models in terms of the method of allocation of block grants, the allocation of taxation to other tiers of government, and the way in which are used to achieve the twin objectives of fiscal efficiency and equity. Finally, we consider whether the 'asymmetric nature' of UK devolution, with different national and regional units being assigned different degrees of autonomy, represents a desirable model in the light of experiences elsewhere in Europe. In the next section, we outline the division of spending responsibilities between different tiers of government in the OECD economies. Then we compare the degrees of fiscal autonomy, and assess whether further reform is warranted in the case of the UK. In subsequent sections, we consider how the mixed use of central grants, shared taxation and devolved taxation can impact on the objectives of efficiency and equity; discuss the extent to which different subcentral governments have autonomy on borrowing; and examine how fiscal federalism is evolving in different countries.

Reconciling Accountability and Fiscal Prudence? A Case Study of the Budgetary Role and Impact of the German Parliament

Based on a case study, this article argues that the goals of accountability and fiscal prudence can be reconciled in the context of the parliamentary budget process. It captures the institutional setting for the budgetary work of the German parliament, in legal, organisational and procedural terms and with regard to its resources. The article then provides an assessment of the budgetary impact of the legislature against the goals of public expenditure management: aggregate fiscal discipline, allocative efficiency, and operational efficiency. The conclusion indicates that some standard arguments cannot explain why the budgetary work of parliament in this case has tended to result in lower deficits and improved public expenditure management. Rather, it is argued, a system that allows for parliament to buy into the overall budgetary aims and policies of the government through a co-operative process facilitates the reconciliation of accountability and fiscal prudence. At the same time, there is scope to refine the public expenditure management model for its application to the comparative study of the budgetary outcomes of legislative behaviour.

Public Investment in the Middle East and North Africa: Towards Fiscal Efficiency

Public Investment in the Middle East and North Africa: Towards Fiscal Efficiency

City Managers: Do They Promote Fiscal Efficiency?

ABSTRACT:Debate over the virtues of one or another form of municipal government has raged since the early days of the reform movement. Proponents of professional municipal management have based their argument on the virtues of having a person trained and practiced in the skills needed to manage the diverse operations and functions that make up the modern city. This line of reasoning encompasses the premise that professional management brings efficiency to municipal management. However, little research has focused on this aspect of professional management. This study uses data from a nationwide survey of cities to test the hypothesis that cities with professional management achieve measurable efficiencies compared to cities without such management. These efficiencies include reduced levels of municipal expenditures and property taxes. The results of this analysis provide significant new information for both scholars and practitioners.

A continuing confusion? A comment on the appropriate dispersal of policy powers in the Australian federation

Dissatisfaction with Australia's federalist constitutional and administrative arrangements seems universal. The Labor Party has historically preferred a centralist thrust to the Australian federal compact. From the opposite, decentralist tack the Liberal‐National Coalition parties currently propose that the Commonwealth should hive‐off policy functions to the States. These attitudes are expressed in an intellectual climate that disparages the allocative efficiency of Australian federalism and debates these issues in terms of shifting power to or from the Commonwealth. A more sensible focus is on the usage that the citizenry has made of the federal system in obtaining satisfactory service delivery. Using this approach our federal system works efficiently (in a limited political‐administrative sense. This is not an argument that Australia's federal system is good because it maximises fiscal efficiency or guarantees equity. It does not do the former'and varies in its attainment of the latter. The federal sys...

Municipal annexation and local monopoly power

We have found that the fiscal power of a city can be increased by extension of its borders within a land area that is homogeneous with respect to earning opportunities, even when numerous rival jurisdictions exist in the area. We hypothesized that extending municipal boundaries will have a positive effect on discretionary outlays and on expenditures per capita. The evidence presented supports these hypotheses. Furthermore, municipal wages appear to be significantly increased in cities experiencing annexation growth. Therefore, we would expect to find that municipal employees are more inclined to favor annexation than the rest of the electorate. From a policy standpoint, this study suggests that significant perverse effects on fiscal efficiency may follow adoption of legal reforms that facilitate the ability of municipalities to extend their borders, or that restrict the formation of new municipalities.

From "A Cornerstone of Canada's Social Structure" to "Financial Self-Suffiency": The Transformation of the Canadian Postal Service, 1852-1987

Much of our recent work has been concerned with demonstrating how postal communications and mail-delivered services have been important agencies of national integration and economic development in Canada. To this end, we have attempted to elucidate the social, economic and political forces instrumental in the development of the modern Canadian postal system (Osborne and Goheen 1983; Osborne and Pike 1983, 1984, 1985, 1985a. 1986; Osborne 1985, 1987). The focus of the present paper moves away from the consideration of the development of the Canadian system in an era of progressive, national expansionism to a discussion of the recent, much publicized call for reform, retrenchment, and innovation. Recent years have witnessed a growing dissatisfaction with the postal service and a major shift in government policy. Increasing costs, perceived inefficiencies in the service, labour disputes, and a recalcitrant deficit have occasioned much public complaint and prompted governmental intervention. The advocacy of a system revitalized b y new management and technological innovation is couched within an ideological shift away from the concept of postal services as a public good and national service to a commercial enterprise concerned with fiscal efficiency.

The Double Inefficiency of the Windfall Profits Tax on Crude Oil

That a temporary severance tax on an exhaustible resource will shift its extraction profile toward the future is not a surprising finding in light of the theory of exhaustible resources. That such a tax, like the WPT on old oil, may also result in grossly inefficient fiscal policy is generally unrecognized. This analysis suggests that the tax rate on old oil could be substantially reduced without loss of tax revenue. The analysis also argues that, in terms of social as well as fiscal efficiency, permanent severance taxes at lower rates will be superior to temporary severance taxes at higher rates. In addition, the analysis contradicts the hypothesis that the incremental tertiary oil recovery provisions of the WPT provide an incentive for production at rates greater than in the absence of the tax. Finally, the analysis shows that, in terms of maximizing the present social value of crude oil production, a WPT rate of 0 is the most efficient policy. 19 references, 2 figures, 3 tables.

Fiscal Efficiency of Central Agencies for Jewish Education

The discussion in this paper departs from a fundamental premise: that in the foreseeable future local central agencies for Jewish education will not be receiving from their parent Federations the degree of increase in allocations which will enable them to significantly expand — let alone sustain at the current levels — the array of services which they deliver. This situation can be traced to a number of factors. To begin with, in many communities the ability of the Federation to raise funds through its annual campaign has leveled off. As a result, the total amount of money available for distribution to all Federation constituencies, including local bureaus of education, is no longer increasing in step-function fashion. Secondly, other Federation beneficiaries are staking claim with ever greater determination to their perceived share of the community dollar. Over the years most central agencies for Jewish education have become inured to this sort of competition for Federation funds from such sister agencies as the Jewish community center, the local Jewish home, and the like. But in recent years, allocations to local Jewish Day Schools have climbed to record levels, often making these institutions prime “competitors” with bureaus of Jewish education for community funds, more particularly with that portion of the total pie which has been allotted to education. This places bureaus in a difficult dilemma: On the one hand, they must support — indeed, encourage — increased funding for Jewish day school education. At the same time, bureaus are confronted with the uncomfortable fact that each community dollar allocated to day school education is a dollar which, potentially, might have been assigned to the central agency.

Fiscal reform and governmental efficiency: Hanging tough

Many surveys of taxpayers in the wake of the fiscal reforms of the 1970's have indicated that frustration with the inefficiency and wastefulness of government is a major motive behind their votes for tax and expenditure limitations. There is a strongly held belief that government can do as much as it is currently doing with much less money. There is also a widespread belief that by reducing the dollar resources available to governments, they will be forced to become less wasteful and more efficient. This paper argues that increased efficiency in local government is an unlikely consequence of the fiscal reform movement. Indeed, lessened efficiency is a more probable outcome.

Political Profit: Taxing and Spending in the Hierarchical State

Abstract. The actions of government fall into two types: taxes (the taking of property) and expenditures (the awarding of gifts). Politicians profit as long as the value of resources raised from taxation exceeds the cost of expenditures. From their point of view, fiscal efficiency consists in maximizing the support obtained by spending and minimizing the opposition generated by taxing. This is accomplished by spending on well‐organized groups and taxing the uninformed public. This results in the “iron law of political redistribution” in which income and wealth are transferred from the latter to the former. In a hierarchical State, it is usually profitable for those at the top to centralize control over taxing and spending, if for no other reason than to make it difficult for politicians at lower levels to compete against them. This gives rise to the “law of hierarchical centralization”—in a hierarchical State, power becomes centralized over time. The greater the power of government, the faster this process takes place. In order to avoid this problem, one could design constitutions which are non‐hierarchical in nature, in which each unit of government is completely autonomous from the others, as firms are in a free market.

Budget Analysis and Fiscal Efficiency

Budget Analysis and Fiscal Efficiency