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 sub-
central governments have autonomy on borrowing; and examine how fiscal federalism is
evolving in different countries. The final section draws conclusions.

The Division of Spending Responsibilities between Jurisdictions

There are sharp differences between the OECD economies in the role played by regional and
local government in the provision of public services (see Table 1¹). Even if one focuses solely
on the EU economies, it is immediately apparent that some countries operate highly
decentralised systems for the delivery of public services. First, the differences between
countries with ‘federal’ and ‘unitary’ structures is more apparent than real². While some
federations tend to assign major welfare (health, education and social welfare) functions to

¹ European Communities (2001) uses figures based on countries’ own definitions, so data are not strictly
comparable across countries. The IMF data presented in Table 1 uses consistent definitions both across
countries and over time. A caveat is that local expenditures mandated by central government, or spent on its
behalf, appear as sub-central expenditures. This may overestimate the extent of decentralisation (see Ebel and
Yilmaz, 2002).

² Spain is not strictly a federation and is often referred to as a ‘quasi-federal’ or ‘regionalised state’ since the
Spanish constitution does not include a federal distribution of powers and the Parliament can transfer legislative
and executive functions without any statutory reform. See Russell Barter (2000) for a more detailed typology of
forms of regional government.

<<   1   2   3   4   5   6   >>

More intriguing information