Cristina
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Fiscal Federalism In Major Countries
Salient features in a few major Federations i.e. Australia and United States.
Australia - There are currently 6 States and 2 territories and approximately 774 local governments. - Commonwealth taxes- are income taxes on individuals and business, sales tax, and taxes on international trade. - The states most important taxes are on payrolls, financial and capital transactions, gambling, insurance, and motor vehicles. - Local government tax immovable property.
In 1998, the commonwealth accounted for:
- 68 percent of all publicsector current revenues - The States raised .28 percent - Local Governments collected around 4 percent
The Australian Inter governmental fiscal transfer system deal with vertical fiscal imbalance and horizontal fiscal imbalance between the states through specific grants specific purpose payments and block grants (general revenue grants) from the federal government to the States and local government.
As pant of Australian Tax reform of 2000, the federal government introduced a goods and services tax (GST) or VAT.
- In Australia, the federal government has retained the exclusive power to tax income. To ensure that the tax system has a highly degree of uniformity in tax rates and tax bases.
The high transfer dependence ratio has not led to fiscal profligacy because there is a remarkable on the need to maintain fiscal discipline at all levels of government.
Australia combine legally mandated transparency with rules and objectives for deficits and dept levels.
The States do not have any rule that prohibit them from running deficits. There is, however, a broad consensus that States should maintain fiscal balance.
As pant of reforms the States are also required To improve frequency and openness of their financial reporting not only to permit monitoring of their financial activities but also to provide move reliable information to the financial markets.
Fiscal F eder alism in t he United Sta tes
The United States federal is highly decentralized, and generally regarded as an example of well managed federal fiscal system.
- US composed of 50 states, 1 federal district and 87, 525 local governments.
The constitution of the United States allows the States to perform all functions that are not expressly reserved for the federal income and do not violate the constitution.
- Both the federal State of government levy a tax on personal income. The federal income tax leaves only limited room for the States. - Most State rely on the use of personal income tax and generally sales taxes, which produce more than two- thirds of their tax revenue.
- US is characterized by very low fiscal -
-
imbalance. State and local government are heavily dependent on transfers from the federal government to meet their fiscal needs. 30 percent
The transfers from the federal government accounting for about 30 percent of States total revenues. - Local government Governments depend on inter- governmental transfers for nearly 37 percent of their total revenues (33 percent from State and 4 percent from federal level). - There is no system in place to equalize fiscal capacity across -
- sub- national governments in the US are, in principle, free to barrow without federal involvement. - The federal government subsides subnational barrowings by exempting the interest on State and local bonds from federal income taxation.
Cambodia
Current situation on fiscal decentralization
- There is an extreme shortage of qualified and competent public finance specialists and line managers.
The government is heightening efforts to monitor budget implementation in the priority areas of health, education, agriculture and rural development building on earlier efforts to improve the management.
Government has declared that line ministries will be provided with quarterly spending plans, more timely transfers, and that quarterly budget allocations and disbursement will be published.
Audit Law was passed in March 2000 establishing the National Audit Authority (NAA) as the Supreme Audit Institution in Cambodia. - The Law empowers the NAA to conduct financial, performance and compliance audits of government ministries, agencies, loan projects, State enterprises, joint venture undertakings in which the government has a financial interest.
Other important features of this law relates to its independence of reporting directly to the national assembly.
Salient features in a few major Federations i.e. Australia and United States.
Australia - There are currently 6 States and 2 territories and approximately 774 local governments. - Commonwealth taxes- are income taxes on individuals and business, sales tax, and taxes on international trade. - The states most important taxes are on payrolls, financial and capital transactions, gambling, insurance, and motor vehicles. - Local government tax immovable property.
In 1998, the commonwealth accounted for:
- 68 percent of all publicsector current revenues - The States raised .28 percent - Local Governments collected around 4 percent
The Australian Inter governmental fiscal transfer system deal with vertical fiscal imbalance and horizontal fiscal imbalance between the states through specific grants specific purpose payments and block grants (general revenue grants) from the federal government to the States and local government.
As pant of Australian Tax reform of 2000, the federal government introduced a goods and services tax (GST) or VAT.
- In Australia, the federal government has retained the exclusive power to tax income. To ensure that the tax system has a highly degree of uniformity in tax rates and tax bases.
The high transfer dependence ratio has not led to fiscal profligacy because there is a remarkable on the need to maintain fiscal discipline at all levels of government.
Australia combine legally mandated transparency with rules and objectives for deficits and dept levels.
The States do not have any rule that prohibit them from running deficits. There is, however, a broad consensus that States should maintain fiscal balance.
As pant of reforms the States are also required To improve frequency and openness of their financial reporting not only to permit monitoring of their financial activities but also to provide move reliable information to the financial markets.
Fiscal F eder alism in t he United Sta tes
The United States federal is highly decentralized, and generally regarded as an example of well managed federal fiscal system.
- US composed of 50 states, 1 federal district and 87, 525 local governments.
The constitution of the United States allows the States to perform all functions that are not expressly reserved for the federal income and do not violate the constitution.
- Both the federal State of government levy a tax on personal income. The federal income tax leaves only limited room for the States. - Most State rely on the use of personal income tax and generally sales taxes, which produce more than two- thirds of their tax revenue.
- US is characterized by very low fiscal -
-
imbalance. State and local government are heavily dependent on transfers from the federal government to meet their fiscal needs. 30 percent
The transfers from the federal government accounting for about 30 percent of States total revenues. - Local government Governments depend on inter- governmental transfers for nearly 37 percent of their total revenues (33 percent from State and 4 percent from federal level). - There is no system in place to equalize fiscal capacity across -
- sub- national governments in the US are, in principle, free to barrow without federal involvement. - The federal government subsides subnational barrowings by exempting the interest on State and local bonds from federal income taxation.
Cambodia
Current situation on fiscal decentralization
- There is an extreme shortage of qualified and competent public finance specialists and line managers.
The government is heightening efforts to monitor budget implementation in the priority areas of health, education, agriculture and rural development building on earlier efforts to improve the management.
Government has declared that line ministries will be provided with quarterly spending plans, more timely transfers, and that quarterly budget allocations and disbursement will be published.
Audit Law was passed in March 2000 establishing the National Audit Authority (NAA) as the Supreme Audit Institution in Cambodia. - The Law empowers the NAA to conduct financial, performance and compliance audits of government ministries, agencies, loan projects, State enterprises, joint venture undertakings in which the government has a financial interest.
Other important features of this law relates to its independence of reporting directly to the national assembly.
