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Reforming Fiscal Federalism and Local Government

Beyond the Zero-Sum Game

image of Reforming Fiscal Federalism and Local Government

This book describes and examines reforms of fiscal federalism and local government in 10 OECD countries implemented over the past decade. The country chapters identify common patterns and factors that are conducive to reforms of the intergovernmental fiscal framework, using a common methodological approach. The summary chapter highlights the cross-cutting issues emerging from the country chapters and shows the key factors in the institutional, political, economic and fiscal areas that are supporting reform success. The report’s approach results in valuable insights for policy makers designing, adopting and implementing fiscal federalism and local government reforms.

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Switzerland: The new fiscal equalisation and responsability assignment framework

Between 2003 and 2007, Switzerland passed a set of constitutional and legal amendments following a popular vote that substantially changed fiscal relations between the federation and the cantons (states). The reform objectives were to renew Swiss federalism, giving cantons more autonomy over a number of policy areas, while achieving a better balance between rich and poor cantons and better collaboration in service delivery across cantonal borders. The reform had several elements. It aimed at i) disentangling a number of policy areas that had been jointly funded and regulated by the federal and cantonal level, ii) introducing a horizontal and vertical equalisation fund to equalise taxraising capacity and public service cost across cantons, iii) obliging cantons to collaborate in public service provision, and iv) introducing new management techniques in the remaining joint tasks (Box 11.1).

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