Fiscal federalism and Fiscal Autonomy: Lessons for the UK from other Industrialised Countries

Figure 2: The Importance of Sub-Central Levels of Government and the Extent of
Fiscal Control

^uk        N NEW ZEALAND

NETHERLANDS

0.2            0.4            0.6            0.8             1.0

Index of Fiscal Control

Source: IMF Government Financial Statistics and OECD (1999)

Note: Figures relate to 1995. Details on the construction of the Index of Fiscal Control are given in
the appendix..

It is apparent that, although the UK’s local government layer has a reasonable degree of
autonomy, the sub-central levels of government in the UK control a very small proportion of
total taxation. In contrast, whilst sub-national jurisdictions in Scandinavia, Belgium and
Japan have slightly lower degrees of fiscal control, the total importance of sub-central
government is much greater. We also see some contrasts between federal states. Switzerland
grants its sub-central governments the greatest control over taxation as indicated by the high
percentage of sub-central taxation. In contrast, German and Austrian Lander have less fiscal
control than might appear at first sight.

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