Key issues of Ensuring Regional Revenue Autonomy in Federal Countries

Available in Russian

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Author: Tatiana Bratko

DOI: 10.21128/1812-7126-2016-3-40-51

Keywords: budget system principles; budgetary autonomy; fiscal federalism; intergovernmental fiscal transfers; revenue assignment; taxing powers


This article surveys typical federal limitations on regional revenue autonomy (Russian Federation, Germany, Switzerland, Australia, Canada, United States of America are cited as examples). Most federal constitutions define revenue-raising powers of the federal and subnational governments. Taxing powers of subnational governments are usually restricted: the federation’s constituent units (regions, states, provinces etc.) do not have access to the major tax sources. That is the main reason for low tax revenues of regional governments and for the lack of their real financial autonomy. Fiscal dominance of the federal government and poor subnational revenue sources (which often are inadequate to finance the expenditures assigned to regional governments) are common features of almost all federations around the world. Unconditional grants are made to the regions to ensure that regional governments have equal fiscal capacities for delivering essential public services. These grants are widely criticized by foreign economists for causing state dependency on central financial resources (the so-called “transfer dependency”). This article provides a review of the key ideas about subnational revenue autonomy in works of foreign scientists and researchers. Many economists emphasize that regional revenue autonomy must be real, not formal: regional governments should be responsible for raising the revenues they spend. If subnational or regional financial autonomy is really going to be real, local governments should rely on their own revenues for financing the services they deliver. The author of this article points out that Russia and other federative states have common revenue assignment problems. The author also suggests a revenue sharing reform with due regard for foreign experience in this field.

About the author: Tatiana Bratko – LL.M., Ph.D. student (St. Petersburg University); tax adviser.

Citation: Bratko T. (2016) Osnovnye problemy obespecheniya samostoyatel'nosty sub'ektov federatsii v sfere formirovaniya budgetnykh dokhodov [Key issues related of regional revenue autonomy in federal countries]. Sravnitel'noe konstitutsionnoe obozrenie, no.3, pp.40–51. (In Russian).


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