James, Simon (2004): Financing multi-level government. Published in: Journal of Finance and Management in Public Services , Vol. 4, No. 1 : pp. 17-32.
Download (193kB) | Preview
The topic of multi-level taxation is currently highly relevant to two issues – European tax harmonisation and local government taxation in the UK. This paper presents a general economic analysis of multi-level government and taxation and the characteristics that might make a particular tax appropriate as a regional or local tax. In applying this analysis to European tax harmonisation it is clear that there is little harmony in the meaning of the term and a classification is presented. The main driving force for EU tax harmonisation has been the promotion of economic efficiency in the form of free trade in order to achieve the establishment and functioning of the European internal market. Differing regional needs and preferences regarding public sector expenditure and taxation may not always be properly recognised. It is suggested that a greater emphasis be placed on equity as an economic criteria in developing European tax harmonisation. Applying the analysis specifically to local government in the UK, it is clear that taxes on property meet most of the criteria relating both to taxes in general and lower level taxes in particular. However as in the case of European tax harmonisation, there seems to have been insufficient account taken of matters of equity as compared to economic efficiency. It has been the issue of equity that caused the demise of local authority domestic rates and the community charge in turn and continues to raise difficulties with the present council tax. It is therefore suggested that coverage of the income tax feature of council tax – council tax rebates – be extended. The experience to date suggests equity as well as economic efficiency is important in the successful development of both European tax harmonisation and UK local government finance and perhaps should be given greater prominence in the development of systems of multi-level taxation more generally.
|Item Type:||MPRA Paper|
|Original Title:||Financing multi-level government|
|Keywords:||tax harmonisation; local government taxation; council tax|
|Subjects:||H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H70 - General
H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue
|Depositing User:||Simon James|
|Date Deposited:||22 Nov 2010 12:07|
|Last Modified:||02 Oct 2016 13:30|
Alesina, A., Perrotti, R. and Spolaore, E. (1995). ‘Together or Separately? Issues on the Costs and Benefits of Political and Fiscal Unions’ European Economic Review, 39, 751-758.
Allsopp, C., Davies, G. and Vines, D. (1995). ‘Regional Macroeconomic Policy, Fiscal Federalism and European Integration’ Oxford Review of Economic Policy, 11, 2, 126-144.
Bernard, N. (1996). ‘The Future of European Economic Law in the Light of the Principle of Subsidiarity’ Common Market Law Review, 33, 633-666.
Bird, R.M. (1993) ‘Threading the Fiscal Labyrinth - Some Issues in Fiscal Decentralisation’ National Tax Journal, 46, 207-227.
Blum, W.J. and Kalven, H. (1953). The Uneasy Case for Progressive Taxation, University of Chicago Press.
Borzel, T.A. ‘Member State Responses to Europeanization’, Journal of Common Market Studies, 40, 193-214.
Brittan, L. (1992). ‘Institutional Development of the European Community’ Public Law, 567-579.
Bucovetsky, S., (1995). ‘Rent Seeking and Tax Competition’ Journal of Public Economics, 58, 337-363.
Bulmer, S., Burch, M., Carter, C., Hogwood, P. and Scott, A. (2002) British Devolution and European Policy-Making: Transforming Britain into Multi-Level Governance, Basingstoke, Palgrave.
Cass, D.Z. (1992). ‘The Word That Saves Maastricht? The Principle of Subsidiarity and the Division of Powers with the European Community’ Common Market Law Review, 29, 1107-1136.
Department of the Environment, (1986) Paying for Local Government, HMSO, Cmnd. 9714, para. 3.12.
de Tocqueville, Alexis, Democracy in America, first published in 1838 and quoted by Oates, W.E. ‘An Essay on Fiscal Federalism’ Journal of Economic Literature, 1999, 37, p. 1120.
Dosser, D. (1973) British Taxation and the Common Market, London, Charles Knight. Economist (2000) 16-22 December.
Foster, C.D., Jackman, R.A. and Perlman, M. (1980). Local Government in a Unitary State, London, Allen & Unwin.
Gibson, J., (1990). The Politics and Economics of the Poll Tax: Mrs Thatcher’s Downfall, Cradley Heath, EMAS.
González, J.P. (1995). ‘The Principle of Subsidiarity European Law Review 20, 355-370.
Gordon, R. H. (1983). ‘An Optimal Taxation Approach to Fiscal Federalism’ Quarterly Journal of Economics 98, 567-586.
Green, P. (1994). ‘Subsidiarity and European Union - Beyond the Ideological Impasse - An Analysis of the Origins and Impact of the Principle of Subsidiarity within the Politics of the European Community’ Policy and Politics 22, 287-300.
Hagemann, R.P., Jones, B.R. and Montador, R.B., (1988) ‘Tax Reform in OECD Countries: Motives, Constraints and Practice’ OECD Economic Studies, 10, 185-226.
Hitiris, T. (1994) European Community Economics, 3rd ed., London, Harvester Wheatsheaf.
Hooghe, L. and Marks, G. (2003) ‘Unraveling the Central State, but How? Types of Multi-level Governance’, American Political Science Review, 97, 233-243.
Inman, R. P. and Rubinfeld, D.L. (1996) ‘Designing Tax Policy in Federalist Economies: An Overview’ Journal of Public Economics, 60, 307-334.
James, S. and Alley, C. (2002) ‘Tax Compliance, Self-Assessment and Tax Administration’ Journal of Finance and Management in Public Services, 2, 27-42.
James, S. and Nobes, C. (2003) The Economics of Taxation, 7th ed. updated, Harlow, Prentice Hall.
Kaplow, L. (1996) ‘Fiscal Federalism and the Deductibility of State and Local Taxes under the Federal Income Tax’ Virginia Law Review 82, 413-492.
Kenway, P. and Pannell, J. (2003). The Impact of Council Tax on Older People’s Income, London, New Policy Institute.
Layfield, F. (1976) Local Government Finance, London, HMSO, Cmnd. 6453.
Marks, G., Hooge, L. and Blank, K. (1996) ‘European Integration from the 1980s: State-Centric v. Multi-level Governance’, Journal of Common Market Studies, 34, 341-378.
McLure, Charles E. Jr. (1983) ed. Tax Assignment in Federal Countries, Canberra, Australian National University.
Mill, J.S., (1871) Principles of Political Economy, 7th ed. London, Longmans.
Moussis, N. (1994) Handbook of the European Union, European Study Service (Edit-Eur).
Musgrave, P.B. (1967) ‘Harmonisation of Direct Business Taxes: A Case Study’ in C.S. Shoup, Fiscal Harmonisation in Common Markets, Volume II, Practice, Columbia University Press.
Musgrave, R.A. (1959) The Theory of Public Finance, NewYork, McGraw-Hill.
Neumark Committee (1963) EEC Reports on Tax Harmonisation, Amsterdam, International Bureau of Fiscal Documentation.
Oates, Wallace E. (1999). ‘An Essay on Fiscal Federalism’ Journal of Economic Literature, 37, 1120-1149.
Persson, T., and Tabellini, G. (1994) ‘A European State: Lessons from Existing Federations - Does Centralisation increase the size of Government?’ European Economic Review 38, 765-773.
Pigou, A.C., (1932) The Economics of Welfare, 4th ed. London, Macmillan.
Prest, A.R. (1979). ‘Fiscal Policy’ in P. Coffey (ed.) Economic Policies of the Common Market, London, Macmillan.
Prudhomme, P. (1995). ‘The Dangers of Decentralisation’ World Bank Research Observer, 201.
Rounds, T. A. (1992). ‘Tax Harmonisation and Tax Competition: Contrasting Views and Policy Issues in Three Federal Countries’ Publius: The Journal of Federalism 22, 91-121.
Smith, A. (1776). The Wealth of Nations, Cannan ed., London, Methuen, 1950, Bk. IV, Ch. IX.
Smith, S. (1988). ‘Should UK Local Government be Financed by a Poll Tax?’ Fiscal Studies, 9, 18-28.
Tiebout, C.M. (1956). ‘A Pure Theory of Local Expenditures’ Journal of Political Economy, 64, 416-24.
Toth, A.G. (1992). ‘The Principle of Subsidiarity in the Maastricht Treaty’ Common Market Law Review, 29, 1079-1105.
HM Treasury, (2002). Reforming Britain’s Economic and Financial Policy: Towards Greater Economic Stability, Palgrave.
Trevelyan, G.M. (1946). English Social History, 2nd ed., Longmans, Green and Co.
Weatherill, S. (1996). Cases and Materials on EC Law, 3rd ed., London, Blackstone Press.
Weatherill, S. and Beaumont, P. (1999). EC Law, 3rd ed., London, Penguin.