The imperative of fiscal sharing transfers

Equalising transfers from central governments to subnational governments are features of the fiscal arrangements of many federations. It is argued that these transfers are necessary complements to systems of interpersonal redistribution. They facilitate the process of decentralisation by enabling su...

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Bibliographic Details
Published in:International social science journal 2001-03, Vol.53 (167), p.103-110
Main Author: Boadway, Robin
Format: Article
Language:English
Subjects:
Central Government
Decentralization
Economics
Federalism
Federations
Fiscal Policy
Local Government
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Summary:Equalising transfers from central governments to subnational governments are features of the fiscal arrangements of many federations. It is argued that these transfers are necessary complements to systems of interpersonal redistribution. They facilitate the process of decentralisation by enabling subnational jurisdictions to exercise their autonomy in ways that do not detract from national objectives of equity and efficiency. This is because decentralisation inevitably results in subnational jurisdictions taking on tasks that have consequences for the attainment of these objectives, and it also results in different jurisdictions having differing fiscal capacity to deliver the services assigned to them. The benefits and costs of fiscal decentralisation are summarised. Properly designed fiscal sharing schemes enable the benefits of decentralisation to be achieved without incurring all the costs. Some of the features of fiscal sharing schemes that might accomplish this are outlined.
ISSN:0020-8701
1468-2451
DOI:10.1111/1468-2451.00298