Measuring decentralisation

The OECD has done path breaking work in developing indicators of local autonomy. The work begun in the late 1990s on a taxonomy of local taxing power seems especially promising. In contrast to measures of local shares of total expenditure and revenue it focuses on the discretion enjoyed by local authorities. This is at the heart of the theoretical concepts of local autonomy, authority or decentralisation. It is therefore recommendable to continue the OECD work on establishing a cross-national dataset on local taxing power. But there is still work ahead before this particular indicator is completely satisfactory. The Danish experience shows how difficult it is to make a correct coding of individual countries. It is not enough to focus on official rules in national tax codes. At least in Denmark, these rules are nested in informal institutions and supplemented by other formal rules that make the formal tax codes grossly misleading.

Measuring Fiscal Decentralisation: Concepts and Policies

Measuring decentralisation

The challenge of the Danish story