Looking for appropriate forms of intergovernmental transfers for municipalities in transition economies

Intergovernmental transfers can be either conditional or unconditional with regard to the autonomy of local governments in spending such financial means. Although fiscal decentralisation has recently been quite pronounced in Eastern European transition countries, the dominance of a purpose-and project-oriented, down-flow transfer system is apparent. In adopting abundant matching grants, the central government in these countries will further try to efficiently lead the provision of local public goods and services, which could, however, make the process of carrying-out legally assigned public activities by municipalities less 'self-governing'. On the other hand, the west German municipal resource allocation system ("Kommunalausgleichsystem") was implemented also in the eastern part of the country after unification, which primarily provides unconditional transfers for local governments. Furthermore, in the case of adopting the so-called principle of parallel development of fiscal capacity between the state and municipalities ('Gleichmäßigkeitsgrundsatz'), as Saxony already has done, the intergovernmental transfer ratio is no longer exogenously but endogenously determined, which better guarantees a just resource allocation between the two jurisdictions. Since the subsidiarity principle backed by sufficient own fiscal resources (from local taxes, in particular) and unconditional transfers appears to gradually gain significance in providing local utilities, this study shows the recent Saxon experience with unconditional transfers, which can be a helpful yardstick for the future political discussion aimed at improving the fiscal develolution system in many Easten European transition economies.

Looking for Appropriate Forms of Intergovernmental Transfers for Municipalities in Transition Economies

Intergovernmental transfers can be either conditional or unconditional with regard to the autonomy of local governments in spending such financial means. Although fiscal decentralisation has recently been quite pronounced in Eastern European transition countries, the dominance of a purpose- and project-oriented, down-flow transfer system is apparent. In the context of unification, the west German municipal resource allocation system was also implemented in the eastern part of the country, which provides primarily unconditional transfers for local governments. Furthermore, in the case of adopting the principle of parallel development of fiscal capacity between the state and municipalities, as Saxony already has done, the intergovernmental transfer ratio is no longer exogenously but endogenously determined, which better guarantees a just resource allocation between the two jurisdictions. Since the subsidiarity principle backed by sufficient own fiscal resources and unconditional transfers appears to gain significance in providing local utilities, this study shows the recent Saxon experience with the unconditional transfers, which can be considered for the future fiscal devolution process of Eastern European transition countries.intergovernmental transfers, fiscal decentralisation, local expenditure needs, municipal tax revenues, vertical fiscal equalisation, Saxony, Germany, European transition economies

Municipal Finance in Poland, the Slovak Republic, the Czech Republic and Hungary: Institutional Framework and Recent Development

The recent process of political and economic transformation in eastern European countries has not only contributed to the decentralisation of political structure but also significantly enhanced the fiscal autonomy of municipalities in these countries. In this context many similar types of public activities have recently been assigned to local governments, and some taxes were also declared to be local taxes. To be sure, this type of fiscal decentralisation has caused some additional problems, particularly for safeguarding the quality of publicly provided goods and services and for co-ordinating intergovernmental fiscal transfers between the central and local governments. For instance, some criticise that many small-sized municipalities in the transition economies have suffered from financial bottleneck and have not been able to receive sufficient financial support from the central government. However, such a fiscal devolution trend appears to continue. This study primarily deals with issues surrounding the impact of national fiscal policy and the regulatory framework on local governments expenditure behaviour and their ability to mobilise necessary revenues under the particular consideration of the institutional and administrative co-operation with the central government and of the less well-developed financial market in Poland, the Slovak Republic, the Czech Republic and Hungary.Fiscal decentralisation, local expenditures and taxes, shared taxes, intergovernmental transfers, municipal borrowings, Poland, the Slovak Republic, the Czech Republic, Hungary

Lessons of the 1999 Abolition of Intra-EU Duty Free Sales for Eastern European EU Candidates

At the end of June 1999 the intra-EU duty free shopping was abolished among the fifteen member nations. The opponents of this resolution argued that such a tax-free sales sector created jobs EU-wide and hardly reduced the value added and excise tax revenue of individual countries. In their opinion, duty free trade not only contributed to the reduction of travel fare within the EU but could also be characterised as a supplement to the normal retail trade for some products. Such ‘old’ ideas are increasingly popular in some Eastern European EU candidates where they are preparing for the introduction of the Single Market and EU membership in the near future. This study primarily shows that the arguments mentioned above were neither significant enough nor conclusive to maintain the intra-EU duty free shopping. Furthermore, the abolition of such tax free sales was approved in the EU in order to ensure the allocation efficiency of the VAT and excise tax system within a single market. Several arguments against the intra-EU tax free shop-ping examined in the study provide some helpful policy orientations for EU membership candidates.

The Ifo Institute’s Model for Reducing VAT Fraud: Payment First, Refund Later

Umsatzsteuer, Steuerstraftat, Steuersystem, Sales tax, Tax system

Measurement of Value Added Tax Evasion in Selected EU Countries on the Basis of National Accounts Data

The size of tax evasion and fraud appears to be increasing steadily in the EU. To a certain extent, the completion of Single Market has further encouraged firms’ and households’ evasive behaviour in paying value added taxes in the EU Member States, whereas such efforts have traditionally been most pronounced in the field of corporate and personal income taxation. This study primarily deals with the quantification of the VAT evasion and fraud in the EU. On the basis of the national accounts data, it suggests a novel way of estimating the annual amount of hypothetical VAT revenues for the individual EU countries. The relation between the calculated hypothetical and the (current) collected revenues in a fiscal year largely determines the extent of VAT evasion and fraud of a country, when the time-lag problem between the creation of tax liability and the VAT collection in cash terms can be adjusted.

The Effect of Technical Changes in Industry on Teaching Bookkeeping in High School

The purpose of this study was to determine: (a) employment policies concerning high school graduates; (b) use of types of adding and calculating machines as well as computers; (c) types of activities performed; and (d) attitudes and skills of applicants. Business firms in cities in Illinois, Iowa, Minnesota, and Wisconsin were chosen rather subjectively for this study. Letters and questionnaires were sent to them. A 99 per cent return was obtained. Data was analyzed and tabulated. The findings present: (a) employment policies concerning high school graduates and activities they will perform, attitudes most preferred by employers in employees, and types of tests administered to prospective employees; (b) types of employee job-training programs; (c) types of office machines and computers in use; and (d) helpful suggestions from employers. The findings disclosed the possible employment of high school graduates who possess certain skills and attitudes; the use of various adding, calculating, and bookkeeping machines, as well as extensive use of computers. Present industrial conditions and government regulations indicate the need of intelligent and well-prepared accountants. Possible recommendations are (a) high school business education teachers should encourage bookkeeping students of high caliber to enroll in college accounting classes before applying for an accounting position; (b) students should learn to operate ten-key adding machines; (c) students should be familiar with the more common computer terminology; and (d) teachers must keep up with the rapid changes in the accounting profession

Regional Technolgy Policy and Factors Shaping Local Innovation Networks in Small German Cities

Local innovation networks have been considered to be particularly important to innovation and technological change and to the growth prospects of regions and cities in Germany. Accordingly, innovation is a process that results from various (economic and social) interactions of different institutions located in a given region. Consequently, when analysing the local (or regional) innovation system, one should not only investigate the (horizontal and vertical) relations among firms but also the contacts with universities and other research institutions. Furthermore, the role of government agencies and interest groups that provide financial support as well as commercial and technical information should also be taken into account in the context of the regional innovation system. However, the review of relevant theoretical and empirical investigations related to the German experience shows that such innovation and R&D cooperation networks appear to be less significant than expected. In particular those high-tech firms in small-sized German cities have a direct access to the international innovation network, which quite often has made a more crucial contribution to their business performances than the regional and national ones have done. In general various regional technology policy measures adopted in German states (provision of research infrastructure, establishment of technology centres, innovative SME support programmes, etc.) have been more successful in already economically better-off large cities but failed to establish a significant intra-technological cooperation among partners in the rather less-developed areas which lack sufficient know-how, a socio-cultural and institutional infrastructure and a certain degree of entrepreneurial tradition. Apat from offering a critical review of relevant theoretical and empirical research, this study introduces the present regional technology and R&D promotion policies in German states and examines the distinctive characteristics of the local innovation system, emphasising the experiences of two small cities, Landshut and Bochum.

Lessons of the 1999 Abolition of Intra-EU Duty Free Sales for Eastern European EU Candidates

At the end of June 1999 the intra-EU duty free shopping was abolished among the fifteen member nations. The opponents of this resolution argued that such a tax-free sales sector created jobs EU-wide and hardly reduced the value added and excise tax revenue of individual countries. In their opinion, the duty free trade not only contributed to the reduction of the travel fare within the EU but also could be characterised as a supplement to the normal retail trade for some products. Such ‘old’ ideas are increasingly gaining popularity in some Eastern European EU candidates in the context of the preparation process for the introduction of the Single Market and the EU membership in the near future. This study primarily shows that the arguments mentioned above were neither significant enough nor conclusive to maintain the intra-EU duty free shopping. Furthermore, the abolition of such tax free sales was approved in the EU in order to ensure the allocation efficiency of the VAT and excise tax system within a single market. Several arguments against the intra-EU tax free shopping examined in the study provide some helpful policy orientations for EU membership candidates.duty free shopping, EU single market, value added and excise tax harmonisation, eastern european candidates