Dysfunction of Fiscal Equalization Mechanisms in the System of Local Government Finances in Poland
DOI:
https://doi.org/10.4335/13.3.1019-1045(2015)Keywords:
sub-national government, horizontal fiscal equalization, vertical fiscal equalization, intergovernmental transfers, PolandAbstract
The main objective of this paper is to determine the substance of equalization systems and the causes and effects of their use in local finances, as well as the analysis of the differences of existing equalization mechanisms in selected countries. However, the specific objective is the identification of the key drawbacks and dysfunctions of the equalization system in Poland and to propose specific recommendations in the context of introducing necessary reforms. The authors of the paper present the view that firstly, actions should be undertaken to strengthen the financial autonomy of Polish local government entities, and only later, as a result, build a new equalization system adapted to the level of revenue and expenditure independence and different expenditure needs of local government in Poland.
References
<p align="justify"><span lang="EN-US" style="font-size: 13px; font-family: Cambria">Akai N., Nishimura Y. & Sakata M. (2007) Complementarity, Fiscal Decentralization and Economic Growth, Economics of Governance, 8(4), pp. 339-362.
Aristovnik A. (2012) Fiscal decentralization in Eastern Europe: trends and selected issues, Transylvanian Review of Administrative Sciences, 37 E, pp. 5-22.
Bahl R. W. (2010) Conditional Versus Unconditional Grands: The Case of Developing Countries, In: In: Kim, J., Lotz, J. & Mau, N. J. (eds.) General Grants versusEarmarked Grants: Theory and Practice (Copenhagen: The Korea Institute of Public Finance and the Danish Ministrz of Interior and Health).
Bergvall D., Charbit C., Kraan D. J. & Merk, O. (2006) Intergovernmental Transfers and Decentralized Public Spending, Working Paper No. 3 (Paris: OECD).
Bird R. & Vaillancourt F. (2007) Expenditure-Based Equalization Transfers, In: Martinez-Vazquez J. & Searle, B. (eds.) Fiscal Equalization – Challenges in the Design of Intergovernmental Transfers (New York: Springer).
Blair P. (1993) Financial Equalization Between Local and Regional Authorities in European Countries, In: Gibson J. & Batley R. (eds.) Financing European Local Government (London: Frank Cass @ CO LTD.).
Blöchliger H. (2014b) Fiscal Equalization – A Cross-Country Perspective, Paper presented at the conference on "Fiscal Equalisation, Berlin, 26-27 June 2014.
Blöchliger H. (ed.) (2014a) Fiscal Federalism: Making Decentralisation Work (Paris: OECD).
Blöchliger H. & Charbit C. (2008) Fiscal Equalization, OECD Economic Studies No. 44 (1) (Paris: OECD).
Boadway R. (2004) The Theory and Practice of Equalization, CESifo Economic Studies, 50(1), pp. 211-254, doi: 10.1093/cesifo/50.1.211.
Boadway R. & Shah A. (2007) Intergovernmental fiscal transfers principles and practice, In: Boadway R. & Shah A. (eds.) Public Sector Governance and Accountability Series (Washington: The World Bank).
Boex J. & Martinez-Vazquez J. (2004) Designing Intergovernmental Equalization Transfers with Imperfect Data: Concepts Practices, and Lessons (New York: Springer).
Boyne G. A. (1990) Equalization grants and local expenditure needs (Avebury: Gower Pub Co).
Break G. (1980) Financing Government in a Federal System (Washington, DC: The Brooking Institution).
Buchanan J. M. (1950) Federalism and Fiscal Equity, The American Economic Review, 40(4), pp. 583-599.
Buchanan J. M. & Goetz Ch. J. (1972) Efficiency Limits of Fiscal Mobility, Journal of Public Economics, 1(1), pp. 25-43.
Dafflon B. (1995) Fédéralisme et solidarité (Fribourg: University of Fribourg, Instutute of Federalism).
Dafflon B. (2012) Solidarity and design of equalization: setting out the issues, In: eJournal of Tax Research, 10(1), pp. 138-164.
Dafflon B. & Vaillancourt F. (2003) Problems of Equalization in Federal Systems, In: Blindenbacher R. & Koller A. (eds.) Federalism in a Changing World – Learning from Each Other (Kingston: McGill-Queen's University Press).
Constitutional Tribunal (2014) Decision of the Constitutional Tribunal of 4 March 2014, Ref. K 13/11, Journal of Laws, item 348.
Supreme Administrative Court (2013) Decision of the Supreme Administrative Court of 5 March 2013, Ref. II OSK 135/13 (Warsaw: Supreme Administrative Court).
Ebel R. D. & Yilmaz S. (2002) On the Measurement and Impact of Fiscal Decentralization, World Bank Policy Research Working Paper No. 2809 (Washington, DC: the World Bank).
Council of Europe (1985) European Charter of Local Self-Government (Strasbourg: Council of Europe).
Council of Europe (997) European Charter of Regional Self-Government (Strasbourg: Council of Europe).
Fajferski S. & Ziolo M. (2008) Centralizacja i decentralizacja zadań pubicznych w świetle wybranych rozwiązań europejskich. Próba oceny, Studia Regionalne i Lokalne, 33(3), pp. 76-94.
Flatters F., Henderson V. & Mieszkowski P. (1974) Public Goods, Efficiency and Regional Fiscal Equalization, Journal of Public Economics, 3(2), pp. 99-112.
Foremny, D. & von Hagen, J. (2012) Fiscal Federalism in Times of Crisis, CEPR Discussion Paper No. 9154 (London: Centre for Economic Policz Research).
Fossati A. & Panella G. (eds.) (2005) Fiscal Federalism in the European Union (London, New York: Routledge Studies in the European Economy).
Gilbert G. (1996) Le fédéralisme financier: perspectives de microéconomie spatiale, Revue Économique, 47(2), pp. 311-363.
Eurostat (2015) Gini Coefficient of Equivalised Disposable ncome (source: SILC) (Luxembourg: Eurostat) available at: http://appsso.eurostat.ec.europa.eu/nui/show.do?
wai=true&dataset=ilc_di12 (January 25, 2015).
Guziejewska B. (2008) Efektywność finansów samorządu terytorialnego, Gospodarka Narodowa, 5-6, pp. 71-89.
Hausner J. (2013) Narastające dysfunkcje, zasadnicze dylematy, konieczne działania. Raport o stanie samorządności terytorialnej w Polsce (Krakow: Uniwersytet Ekonomiczny w Krakowie, Małopolska Szkoła Administracji Publicznej).
Ministry of Finance (2014) Informacja z wykonania budżetów jednostek samorządu terytorialnego za IV kwartały 2013 roku (Warsaw: Ministry of Finance).
Inman R. F. & Rubinfeld D. L. (1996) Designing Tax Policy in Federalist Economies: An Overview, Journal of Public Economics, 60(3), pp. 307-334.
Juul T. (2014) Local Government Equalisation in Denmark, The Ministry of Finance, Poland and the World Bank Workshop on “Fiscal Equalization Transfers – International Practices: Lessons for Poland”, Warsaw, 11-12 December 2014.
Kim J., Lotz J. & Blöchliger H. (eds.) (2013) Measuring Fiscal Cecentralisatio: Concepts and Policies, OECD Fiscal Federalism Studies (Paris: OECD).
Kim J., Lotz J. & Mau N. J. (eds.) (2010) General Grands Versus Earmarked Grands: Theory and Practice (Albertslund-Seul: The Korea Institute of Public Finance the Danish Ministry of Interior and Health).
King D. (1997) Intergovernmental Fiscal Relations: Concepts and Models, In: Fisher R. C. (ed) Intergovernmental Fiscal Relations (Dordrecht: Kluwer).
Lotz, J. (1998) Limitation of Local Taxation, Financial Equalisation and Methods of Calculating General Grants (Strasbourg: Council of Europe).
Liu Y., Martinez-Vazquez J. & Timofeev A. (2013) Measuring the extent of fiscal decentralisation: An application to the United States (Atlanta: Georgia State University, Economics Faculty Publications).
Mackiewicz-Łyziak J., Malinowska-Misiąg E. & Misiąg W. (2008) Wyrównywanie dochodów jednostek samorządu terytorialnego. Możliwości wykorzystania w Polsce doświadczeń niemieckich krajów związkowych (Warsaw: Instytut Badań nad Gospodarką Rynkową).
Martinez - Vazquez J. & Timofeev A. (2009) Decentralizaton Measures Revisited, International Studies Program Working Paper 09-13 (Atlanta: International Center for Public Policy).
Meloche, J. P., Vaillancourt F. & Yilmaz S. (2004) Decentralization or Fiscal Autonomy? What Does Really Matter? Effects on Growth and Public Sector Size in European Transition Countries, World Bank Policy Research Working Paper No. 3254 (Washington DC: The World Bank).
Musgrave R. M. (1959) Theory of Public Finance (New York: McGrav Hill).
Oakland, W. H. (1994) Recognizing and Correcting for Fiscal Disparities: A Critical Analysis, In Anderson J. E. (ed.) Fiscal Equalization for State and Local Government Finance (Westport: Praeger).
Oates W. E. (1998) The Economics of Fiscal Federalism and Local Finance (Northampton, MA: Edward Elgar).
Olejniczak J. (2010) System wpłat do budżetu państwa dokonyanych przez samorządy terytorialne z przeznaczeniem na wyrównanie dochodów innych samorządów, ze szczególnym uwzględnieniem problemu Warszawy i województwa mazowieckiego, Kancelaria Senatu, Biuro Analiz i Dokumentacji, Opinie i Ekspertyzy OE – 142 (Warsaw: Kancelaria Senatu).
Oplotnik Ž. & Mateja F. (2013) Comparison of Fiscal Decentralization Systems in EU-27 According to Selected Criteria, Lex localis - Journal of Local Self-Government, 11(3), pp. 651-672, doi: 10.4335/11.3.651-672(2013).
Pratchett L. (2001) Towards a separation of local autonomy and local democracy (De Montfort University, UK: Department of Public Policy).
Council of Europe (2000) Recommendation Rec(2000) 14 of the Committee of Ministers to member states on local taxation, financial equalization and grants to local authorities, adopted on September 6, 2000 (Strasbourg: Council of Europe).
Council of Europe (2005) Recommendation Rec(2005)1 of the Committee of Ministers to member states on the financial resources of local and regional authorities, adopted on January 19, 2005 (Strasbourg: Council of Europe).
Reschovsky A. (2007) Compensating Local Governments for Differences in Expenditure Needs in a Horizontal Fiscal Equalization Program, In: Boadway R. & Shah, A. (eds.) Intergovernmental Fiscal Transfers: Principles and Practice, Public Sector Governance and Accountability Series (Washington, DC: The World Bank).
Rodríguez-Pose A. & Krřijer A. (2009) Fiscal Decentralization and Economic Growth in Central and Eastern Europe, LEQS Paper No. 12 (London: the London School of Economics and Political Science).
Shah A. (2014) Principles and the Practice of Fiscal Equalization Transfers with special emphasis on Solidarity or Robin Hood Programs, The Ministry of Finance, Poland and the World Bank Workshop on “Fiscal Equalization Transfers – International Practices: Lessons for Poland”, Warsaw, 11-12 December 2014.
Sierak J. (2015) Analiza funkcjonującego systemu wyrównywania dochodów jednostek samorządu terytorialnego wraz z propozycją jego modyfikacji (Warsaw).
Stiglitz J. E. (2004) Ekonomia sektora publicznego (Warszawa: PWN).
Swianiewicz P. (2003) Transfery z budżetu państwa dla samorządów lokalnych, Studia Regionalne i Lokalne, 1(11), pp. 97-125.
Swianiewicz P. (2011) Finanse samorządowe. Koncepcje, realizacja, polityki lokalne (Warsaw: Municipium S.A.).
Tiebout Ch. M. (1956) A Pure Theory of Local Expenditure, Journal of Political Economy, 64(5), pp. 416-424.
Vo D. H. (2008) New Fiscal Decentralization Indices, in: The Economics of Measuring Fiscal Decentalisation (Crawley WA: University of Western Australia).
Wetzel D. & Dunn J. (2001) Decentralization in the Transition Economies: Challenges and Theroad Ahead (Washington, DC: World Bank).
Zwiech P. (2013) Nierówności dochodowe w państwach europejskich – analiza przy wykorzystaniu współczynnika Giniego, Studia Ekonomiczne, 145, pp. 89-101.
</span></p>
Aristovnik A. (2012) Fiscal decentralization in Eastern Europe: trends and selected issues, Transylvanian Review of Administrative Sciences, 37 E, pp. 5-22.
Bahl R. W. (2010) Conditional Versus Unconditional Grands: The Case of Developing Countries, In: In: Kim, J., Lotz, J. & Mau, N. J. (eds.) General Grants versusEarmarked Grants: Theory and Practice (Copenhagen: The Korea Institute of Public Finance and the Danish Ministrz of Interior and Health).
Bergvall D., Charbit C., Kraan D. J. & Merk, O. (2006) Intergovernmental Transfers and Decentralized Public Spending, Working Paper No. 3 (Paris: OECD).
Bird R. & Vaillancourt F. (2007) Expenditure-Based Equalization Transfers, In: Martinez-Vazquez J. & Searle, B. (eds.) Fiscal Equalization – Challenges in the Design of Intergovernmental Transfers (New York: Springer).
Blair P. (1993) Financial Equalization Between Local and Regional Authorities in European Countries, In: Gibson J. & Batley R. (eds.) Financing European Local Government (London: Frank Cass @ CO LTD.).
Blöchliger H. (2014b) Fiscal Equalization – A Cross-Country Perspective, Paper presented at the conference on "Fiscal Equalisation, Berlin, 26-27 June 2014.
Blöchliger H. (ed.) (2014a) Fiscal Federalism: Making Decentralisation Work (Paris: OECD).
Blöchliger H. & Charbit C. (2008) Fiscal Equalization, OECD Economic Studies No. 44 (1) (Paris: OECD).
Boadway R. (2004) The Theory and Practice of Equalization, CESifo Economic Studies, 50(1), pp. 211-254, doi: 10.1093/cesifo/50.1.211.
Boadway R. & Shah A. (2007) Intergovernmental fiscal transfers principles and practice, In: Boadway R. & Shah A. (eds.) Public Sector Governance and Accountability Series (Washington: The World Bank).
Boex J. & Martinez-Vazquez J. (2004) Designing Intergovernmental Equalization Transfers with Imperfect Data: Concepts Practices, and Lessons (New York: Springer).
Boyne G. A. (1990) Equalization grants and local expenditure needs (Avebury: Gower Pub Co).
Break G. (1980) Financing Government in a Federal System (Washington, DC: The Brooking Institution).
Buchanan J. M. (1950) Federalism and Fiscal Equity, The American Economic Review, 40(4), pp. 583-599.
Buchanan J. M. & Goetz Ch. J. (1972) Efficiency Limits of Fiscal Mobility, Journal of Public Economics, 1(1), pp. 25-43.
Dafflon B. (1995) Fédéralisme et solidarité (Fribourg: University of Fribourg, Instutute of Federalism).
Dafflon B. (2012) Solidarity and design of equalization: setting out the issues, In: eJournal of Tax Research, 10(1), pp. 138-164.
Dafflon B. & Vaillancourt F. (2003) Problems of Equalization in Federal Systems, In: Blindenbacher R. & Koller A. (eds.) Federalism in a Changing World – Learning from Each Other (Kingston: McGill-Queen's University Press).
Constitutional Tribunal (2014) Decision of the Constitutional Tribunal of 4 March 2014, Ref. K 13/11, Journal of Laws, item 348.
Supreme Administrative Court (2013) Decision of the Supreme Administrative Court of 5 March 2013, Ref. II OSK 135/13 (Warsaw: Supreme Administrative Court).
Ebel R. D. & Yilmaz S. (2002) On the Measurement and Impact of Fiscal Decentralization, World Bank Policy Research Working Paper No. 2809 (Washington, DC: the World Bank).
Council of Europe (1985) European Charter of Local Self-Government (Strasbourg: Council of Europe).
Council of Europe (997) European Charter of Regional Self-Government (Strasbourg: Council of Europe).
Fajferski S. & Ziolo M. (2008) Centralizacja i decentralizacja zadań pubicznych w świetle wybranych rozwiązań europejskich. Próba oceny, Studia Regionalne i Lokalne, 33(3), pp. 76-94.
Flatters F., Henderson V. & Mieszkowski P. (1974) Public Goods, Efficiency and Regional Fiscal Equalization, Journal of Public Economics, 3(2), pp. 99-112.
Foremny, D. & von Hagen, J. (2012) Fiscal Federalism in Times of Crisis, CEPR Discussion Paper No. 9154 (London: Centre for Economic Policz Research).
Fossati A. & Panella G. (eds.) (2005) Fiscal Federalism in the European Union (London, New York: Routledge Studies in the European Economy).
Gilbert G. (1996) Le fédéralisme financier: perspectives de microéconomie spatiale, Revue Économique, 47(2), pp. 311-363.
Eurostat (2015) Gini Coefficient of Equivalised Disposable ncome (source: SILC) (Luxembourg: Eurostat) available at: http://appsso.eurostat.ec.europa.eu/nui/show.do?
wai=true&dataset=ilc_di12 (January 25, 2015).
Guziejewska B. (2008) Efektywność finansów samorządu terytorialnego, Gospodarka Narodowa, 5-6, pp. 71-89.
Hausner J. (2013) Narastające dysfunkcje, zasadnicze dylematy, konieczne działania. Raport o stanie samorządności terytorialnej w Polsce (Krakow: Uniwersytet Ekonomiczny w Krakowie, Małopolska Szkoła Administracji Publicznej).
Ministry of Finance (2014) Informacja z wykonania budżetów jednostek samorządu terytorialnego za IV kwartały 2013 roku (Warsaw: Ministry of Finance).
Inman R. F. & Rubinfeld D. L. (1996) Designing Tax Policy in Federalist Economies: An Overview, Journal of Public Economics, 60(3), pp. 307-334.
Juul T. (2014) Local Government Equalisation in Denmark, The Ministry of Finance, Poland and the World Bank Workshop on “Fiscal Equalization Transfers – International Practices: Lessons for Poland”, Warsaw, 11-12 December 2014.
Kim J., Lotz J. & Blöchliger H. (eds.) (2013) Measuring Fiscal Cecentralisatio: Concepts and Policies, OECD Fiscal Federalism Studies (Paris: OECD).
Kim J., Lotz J. & Mau N. J. (eds.) (2010) General Grands Versus Earmarked Grands: Theory and Practice (Albertslund-Seul: The Korea Institute of Public Finance the Danish Ministry of Interior and Health).
King D. (1997) Intergovernmental Fiscal Relations: Concepts and Models, In: Fisher R. C. (ed) Intergovernmental Fiscal Relations (Dordrecht: Kluwer).
Lotz, J. (1998) Limitation of Local Taxation, Financial Equalisation and Methods of Calculating General Grants (Strasbourg: Council of Europe).
Liu Y., Martinez-Vazquez J. & Timofeev A. (2013) Measuring the extent of fiscal decentralisation: An application to the United States (Atlanta: Georgia State University, Economics Faculty Publications).
Mackiewicz-Łyziak J., Malinowska-Misiąg E. & Misiąg W. (2008) Wyrównywanie dochodów jednostek samorządu terytorialnego. Możliwości wykorzystania w Polsce doświadczeń niemieckich krajów związkowych (Warsaw: Instytut Badań nad Gospodarką Rynkową).
Martinez - Vazquez J. & Timofeev A. (2009) Decentralizaton Measures Revisited, International Studies Program Working Paper 09-13 (Atlanta: International Center for Public Policy).
Meloche, J. P., Vaillancourt F. & Yilmaz S. (2004) Decentralization or Fiscal Autonomy? What Does Really Matter? Effects on Growth and Public Sector Size in European Transition Countries, World Bank Policy Research Working Paper No. 3254 (Washington DC: The World Bank).
Musgrave R. M. (1959) Theory of Public Finance (New York: McGrav Hill).
Oakland, W. H. (1994) Recognizing and Correcting for Fiscal Disparities: A Critical Analysis, In Anderson J. E. (ed.) Fiscal Equalization for State and Local Government Finance (Westport: Praeger).
Oates W. E. (1998) The Economics of Fiscal Federalism and Local Finance (Northampton, MA: Edward Elgar).
Olejniczak J. (2010) System wpłat do budżetu państwa dokonyanych przez samorządy terytorialne z przeznaczeniem na wyrównanie dochodów innych samorządów, ze szczególnym uwzględnieniem problemu Warszawy i województwa mazowieckiego, Kancelaria Senatu, Biuro Analiz i Dokumentacji, Opinie i Ekspertyzy OE – 142 (Warsaw: Kancelaria Senatu).
Oplotnik Ž. & Mateja F. (2013) Comparison of Fiscal Decentralization Systems in EU-27 According to Selected Criteria, Lex localis - Journal of Local Self-Government, 11(3), pp. 651-672, doi: 10.4335/11.3.651-672(2013).
Pratchett L. (2001) Towards a separation of local autonomy and local democracy (De Montfort University, UK: Department of Public Policy).
Council of Europe (2000) Recommendation Rec(2000) 14 of the Committee of Ministers to member states on local taxation, financial equalization and grants to local authorities, adopted on September 6, 2000 (Strasbourg: Council of Europe).
Council of Europe (2005) Recommendation Rec(2005)1 of the Committee of Ministers to member states on the financial resources of local and regional authorities, adopted on January 19, 2005 (Strasbourg: Council of Europe).
Reschovsky A. (2007) Compensating Local Governments for Differences in Expenditure Needs in a Horizontal Fiscal Equalization Program, In: Boadway R. & Shah, A. (eds.) Intergovernmental Fiscal Transfers: Principles and Practice, Public Sector Governance and Accountability Series (Washington, DC: The World Bank).
Rodríguez-Pose A. & Krřijer A. (2009) Fiscal Decentralization and Economic Growth in Central and Eastern Europe, LEQS Paper No. 12 (London: the London School of Economics and Political Science).
Shah A. (2014) Principles and the Practice of Fiscal Equalization Transfers with special emphasis on Solidarity or Robin Hood Programs, The Ministry of Finance, Poland and the World Bank Workshop on “Fiscal Equalization Transfers – International Practices: Lessons for Poland”, Warsaw, 11-12 December 2014.
Sierak J. (2015) Analiza funkcjonującego systemu wyrównywania dochodów jednostek samorządu terytorialnego wraz z propozycją jego modyfikacji (Warsaw).
Stiglitz J. E. (2004) Ekonomia sektora publicznego (Warszawa: PWN).
Swianiewicz P. (2003) Transfery z budżetu państwa dla samorządów lokalnych, Studia Regionalne i Lokalne, 1(11), pp. 97-125.
Swianiewicz P. (2011) Finanse samorządowe. Koncepcje, realizacja, polityki lokalne (Warsaw: Municipium S.A.).
Tiebout Ch. M. (1956) A Pure Theory of Local Expenditure, Journal of Political Economy, 64(5), pp. 416-424.
Vo D. H. (2008) New Fiscal Decentralization Indices, in: The Economics of Measuring Fiscal Decentalisation (Crawley WA: University of Western Australia).
Wetzel D. & Dunn J. (2001) Decentralization in the Transition Economies: Challenges and Theroad Ahead (Washington, DC: World Bank).
Zwiech P. (2013) Nierówności dochodowe w państwach europejskich – analiza przy wykorzystaniu współczynnika Giniego, Studia Ekonomiczne, 145, pp. 89-101.
</span></p>
Published
2015-09-03
Issue
Section
Article
