The principles of parallel development of fiscal capacity between state and municipalities as useful benchmarks for the determination of the inter-governmental grants in Germany
Cw. Nam et al., The principles of parallel development of fiscal capacity between state and municipalities as useful benchmarks for the determination of the inter-governmental grants in Germany, EUR PLAN ST, 9(4), 2001, pp. 525-537
The conventional theoretical and empirical references related to the inter-
governmental fiscal transfer system in Germany appear to heavily concentrat
e on the issues surrounding the measurement of local expenditure needs of a
municipality and their coverage through the down-flow grants when the muni
cipal tax revenue is insufficient to match the needs. This study introduces
additional important research fields in this context. Firstly, it attempts
to analyse the role of the development of tax revenue and fiscal power of
the grant provider (the State) as well as the joint financial relationship
between the State and (different types of rural and urban) municipalities i
n the determination of inter-governmental grants. Secondly, when the total
volume of the State grants is determined, this study examines in the next s
tep under the particular consideration of different tax capacities in varie
d categories of municipalities, how this amount should be horizontally dist
ributed among these groups to achieve the equal growth of hypothetical per
capita fiscal capacity.