OECD - Fiscal Federalism 2016

This 2016 edition of Fiscal Federalism seeks to analyse and propose reform options in the area of intergovernmental fiscal frameworks and sub-central public finance. The policy issues that it addresses are of a structural and macroeconomic nature, covering both the spending and the revenue sides of the budget. After an introductory chapter summarising trends and developments in decentralisation since 1995, the book goes on to examine:

• fiscal constitutions and how they shape intergovernmental fiscal relations and outcomes;

• the recurrent tax on immovable property and how it may underpin moves towards a more efficient, inclusive tax system;

• how a shift from intergovernmental transfers to own taxation may help increase the accountability and efficiency of governments;

• how sub-national governments should monitor and manage debt;

• the spending power of sub-national governments.

• , A birds eye view of fiscal decentralisation , is the introductory chapter to the 2016 edition of Fiscal Federalism . It finds that, although the OECD area is more decentralised than two decades ago, decentralisation has also become more unbalanced. While subnational jurisdictions account for 32% of government spending on average, only 15% of tax revenues accrue to them, which increases the importance of intergovernmental transfers. However, sub-central tax autonomy the power to determine tax bases and rates has also grown. Recurrent taxes on immovable property are on the rise and, more than 20 years on, have overtaken income taxes again as the biggest sub-national tax source. Sub-national governments are responsible for almost two-thirds of public investment a share that has risen slightly over the last two decades, even defying the tight budget constraints after the 2008 crisis. While sub-national debt rose rapidly at that time, it is now generally evening out, although persistent rises in some countries levels of debt could be a cause for concern.