fiscal federalism, financial relations between units of governments in a federal government system. Fiscal federalism is part of broader public finance discipline. The term was introduced by the German-born American economist Richard Musgrave in 1959. Fiscal federalism deals with the division of governmental functions and financial relations among levels of government.
The theory of fiscal federalism assumes that a federal system of government can be efficient and effective at solving problems governments face today, such as just distribution of income, efficient and effective allocation of resources, and economic stability. Economic stability and just distribution of income can be done by federal government because of its flexibility in dealing with these problems. Because states and localities are not equal in their income, federal government intervention is needed. Allocation of resources can be done effectively by states and local governments. Musgrave argued that the federal or central government should be responsible for the economic stabilization and income redistribution but the allocation of resources should be the responsibility of state and local governments.
The following are benefits of fiscal decentralization: regional and local differences can be taken into account; lower planning and administrative costs; competition among local governments favours organizational and political innovations; and more efficient politics as citizens have more influence. There are several disadvantages of fiscal federalism as well: the lack of accountability of state and local governments to constituents; the lack of availability of qualified staff; the possibility for people to choose where to reside; a certain degree of independence of the local governments from the national government; and unavailability of infrastructure of public expenditure at the local level.
Fiscal federalism is affected by the relationship between levels of government and thus by the historical events that shape this relationship. For instance, in the early years of American federalism, geographic separation, slow communication, and clear division of labour made it possible for each level of government to function without significant interactions with other levels. Several developments resulted in more interactions and central planning among the levels of government: improvement in transportation and communication technologies; the New Deal of the 1930s; the World Wars and the Cold War; and the war against poverty from the 1960s. These developments increased the interactions among levels of government and helped the development of national policy making and state and local policy implementation. It also changed traditional intergovernmental relations. National fiscal policies and financial decisions have been the predominant vehicle forming intergovernmental relations. Fiscal federalism operates through the various federal taxes, grants, and transfers that occur in addition to states and localities. The federal government regulates, subsidizes, taxes, provides goods and services, and redistributes income. In federal systems like that of the United States, fiscal policies have also sought to empower the states through deregulation.
Original post:
fiscal federalism | public finance | Britannica
- Kevin McKenna: New BBC political editor wasted no time taking seat on the fence - The National [Last Updated On: December 26th, 2020] [Originally Added On: December 26th, 2020]
- Relation between Federalism and Indian Party System - Rising Kashmir [Last Updated On: December 26th, 2020] [Originally Added On: December 26th, 2020]
- New president says Switzerland 'always puts the health of its population first' - swissinfo.ch [Last Updated On: December 26th, 2020] [Originally Added On: December 26th, 2020]
- SAD: Will work with TMC to strengthen federalism - The Tribune India [Last Updated On: December 26th, 2020] [Originally Added On: December 26th, 2020]
- Scottish independence, the status quo or federalism: Why Labour's third way deserves a fair hearing Scotsman comment - The Scotsman [Last Updated On: December 26th, 2020] [Originally Added On: December 26th, 2020]
- Federalism is an attractive idea for unionists - but past its political sell-by date - Nation.Cymru [Last Updated On: December 26th, 2020] [Originally Added On: December 26th, 2020]
- Federalism in violence: Part II - The World [Last Updated On: December 26th, 2020] [Originally Added On: December 26th, 2020]
- Is Anthony Fauci Right That Federalism Undermined the U.S. Response to COVID-19? - Reason [Last Updated On: December 29th, 2020] [Originally Added On: December 29th, 2020]
- What does everyone keep getting wrong about India (and China and Pakistan)? - Scroll.in [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- 'New laws hurt farmers': Governor reads Kerala's resolution against Centres' agri policies in assembly - The New Indian Express [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- India Had Never Really Been a Federal State, Wrote Pranab Mukherjee in Memoir 'The Presidential Years' - News18 [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- Ramachandra Guha: Under cover of Covid-19, Modi regime has stepped up its attack on Indian democracy - Scroll.in [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- BJPs agenda of one nation, one election is a threat to democracy and federalism - National Herald [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- News: OFC says, again,very difficult to participate in election under current conditions; cautions threat to multinational federalism dangerous move -... [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- Provincial structure is heart of federalism, says CM Rai - The Himalayan Times [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- Federalism is the answer, after all - Part 11Opinion - Guardian [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- Threat to democracy and federalism - Greater Kashmir [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- Grande: Federalism is the only answer - INFORUM [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- The Blessings (and Curses) of Federalism - The Wall Street Journal [Last Updated On: January 9th, 2021] [Originally Added On: January 9th, 2021]
- Federalism is the answer, after all - Part 12 - Guardian [Last Updated On: January 17th, 2021] [Originally Added On: January 17th, 2021]
- With Boris Johnson and Nicola Sturgeon both posing threats to the Union, federalism is now essential to save the UK Menzies Campbell - The Scotsman [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Federalism is the answer, after all - Part 15 | The Guardian Nigeria News - Nigeria and World NewsOpinion The Guardian Nigeria News Nigeria and... [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Budget 2021: Cooperative Federalism - the route to increase GST collections - Business Today [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Federalism without the Guardian: Ethiopia in the Row - Satenaw Ethiopian News/Breaking News | Your right to know! [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- PM Oli clarifies his stance on monarchy and federalism - MyRepublica [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Federalism could make Scotland feel like an independent state without the costs of becoming one Professor Marc Weller - The Scotsman [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Drone Federalism Bil Could Be Added to Budget Bill - DRONELIFE - DroneLife [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Federalism in the United States - Wikipedia [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Federalism | Constitution USA | PBS [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Federalism | Wex | US Law | LII / Legal Information Institute [Last Updated On: February 6th, 2021] [Originally Added On: February 6th, 2021]
- Conflict in Tigray: Implications for Ethiopia's International Standing - Charged Affairs [Last Updated On: February 12th, 2021] [Originally Added On: February 12th, 2021]
- A tale of two federations and their (mis)handling of the pandemic - iPolitics.ca [Last Updated On: February 12th, 2021] [Originally Added On: February 12th, 2021]
- Revolution and counter-revolution - The Kathmandu Post [Last Updated On: February 12th, 2021] [Originally Added On: February 12th, 2021]
- Editorial: Federalism is the answer, after all Part 16 - Guardian [Last Updated On: February 12th, 2021] [Originally Added On: February 12th, 2021]
- Towards competitive Federalism: MEA trains officers from different states to put `Boots on the Ground - The Financial Express [Last Updated On: February 12th, 2021] [Originally Added On: February 12th, 2021]
- US Federalism: Definition and Background - The Great Courses Daily News [Last Updated On: February 12th, 2021] [Originally Added On: February 12th, 2021]
- Why Baroness Cavendish's 'new Act of Union' would do anything but save the UK - The National [Last Updated On: February 22nd, 2021] [Originally Added On: February 22nd, 2021]
- Federalism is the answer, after all - Part 17 - Guardian [Last Updated On: February 22nd, 2021] [Originally Added On: February 22nd, 2021]
- The solution to the farm impasse lies in federalism - Hindustan Times [Last Updated On: February 22nd, 2021] [Originally Added On: February 22nd, 2021]
- Two-day int'l conference on federalism starts at IUB - UrduPoint News [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- Amendments to NCT Act clarify LGs role in Delhi, will lead to greater cooperation between Centre and UT - The Indian Express [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- President Kovind gives assent to GNCTD Bill as Opposition cries Assault on federalism - Republic TV [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- Opposition slams GNCTD Bill as 'unconstitutional', accuses Centre of practising 'coercive federalism' - The New Indian Express [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- Federalism is the answer, after all - Part 22 - Guardian [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- Bill giving primacy to Delhi LG shows hollowness of Modis claims of co-operative federalism - Scroll.in [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- Law and control - The Indian Express [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- Legislation on Delhis division of powers will undermine federalism - The Times of India Blog [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- Coercive federalism, says Oppn as Rajya Sabha passes NCT Bill - The Indian Express [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- How Relevant Is Federalism In View Of The GNCTD Bill? - Outlook India [Last Updated On: March 31st, 2021] [Originally Added On: March 31st, 2021]
- States Fight the Tax-Cut Ban - The Wall Street Journal [Last Updated On: April 9th, 2021] [Originally Added On: April 9th, 2021]
- Federalism And Prospect Of Centre-State Relations In India Analysis - Eurasia Review [Last Updated On: April 9th, 2021] [Originally Added On: April 9th, 2021]
- Rethinking Indian Federalism : Consequences of Diversity-promoting Governing Practices - Economic and Political Weekly [Last Updated On: April 9th, 2021] [Originally Added On: April 9th, 2021]
- Leaked Calls Reveal ALEC's Secret Plan to Thwart Biden on Climate Mother Jones - Mother Jones [Last Updated On: April 21st, 2021] [Originally Added On: April 21st, 2021]
- The Reconstruction Amendments: Essential Documents, a Follow-up to The Founders' Constitution - Reason [Last Updated On: April 21st, 2021] [Originally Added On: April 21st, 2021]
- "The Reconstruction Amendments: Essential Documents," Vol. 1: The Antebellum Constitution and The Thirteenth Amendment - Reason [Last Updated On: April 21st, 2021] [Originally Added On: April 21st, 2021]
- Falcon can no longer hear the falconer Part 2 - Guardian [Last Updated On: April 25th, 2021] [Originally Added On: April 25th, 2021]
- The contours of the Bengal battle - Hindustan Times [Last Updated On: April 25th, 2021] [Originally Added On: April 25th, 2021]
- Federalism is the answer, after all - Part 26Opinion The Guardian Nigeria News - Guardian [Last Updated On: April 25th, 2021] [Originally Added On: April 25th, 2021]
- Napoleon Bonaparte's impact on Switzerland - SWI swissinfo.ch - swissinfo.ch [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- Oh, what a fall it was - The Kathmandu Post [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- Why Scottish independence and federalism within the UK could have similar practical outcomes Joyce McMillan - The Scotsman [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- If You Want To Fix the Country, Devolve Power - Reason [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- Poll results show the power of federalism - Hindustan Times [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- Probing federalism: The Supremacy Clause | Columnists | willistonherald.com - Williston Daily Herald [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- Federalism: Overview | SparkNotes [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- What is Federalism? - WorldAtlas [Last Updated On: May 11th, 2021] [Originally Added On: May 11th, 2021]
- Struan Stevenson: There's a third way between independence and status quo but it's already doomed - HeraldScotland [Last Updated On: May 20th, 2021] [Originally Added On: May 20th, 2021]
- Does the SNP have the law on its side? - Prospect Magazine [Last Updated On: May 20th, 2021] [Originally Added On: May 20th, 2021]
- Southern Nigeria: Of Federalism and Conservative Rumblings, By Dakuku Peterside - Premium Times [Last Updated On: May 20th, 2021] [Originally Added On: May 20th, 2021]
- Interpretations which impede a just social order - The Hindu [Last Updated On: May 20th, 2021] [Originally Added On: May 20th, 2021]
- As BJP Aims to Homogenise India, Localised Resistance Can Restore Federalism - The Wire [Last Updated On: May 20th, 2021] [Originally Added On: May 20th, 2021]
- The virus gnaws at federalism: This pandemic is testing the robustness of the relationship between the Centre - The Times of India Blog [Last Updated On: May 20th, 2021] [Originally Added On: May 20th, 2021]
- Federalism is the answer, after all - Part 30 - Guardian [Last Updated On: May 20th, 2021] [Originally Added On: May 20th, 2021]
- PM Modis discomfort with non-BJP CMs is hurting the very concept of cooperative federalism - National Herald [Last Updated On: June 6th, 2021] [Originally Added On: June 6th, 2021]
- Federalism, LG Autonomy Top Demands at Constitution Review Hearings - THISDAY Newspapers [Last Updated On: June 6th, 2021] [Originally Added On: June 6th, 2021]
- Cooperative federalism in Covid: Keralas Vijayan writes to non-BJP CMs - Business Standard [Last Updated On: June 6th, 2021] [Originally Added On: June 6th, 2021]
- Federalism is the answer, after all - Part 32 Opinion The Guardian Nigeria News Nigeria and World News - Guardian [Last Updated On: June 6th, 2021] [Originally Added On: June 6th, 2021]
- How West Bengal CM and chief secretary have undermined federalism - The Indian Express [Last Updated On: June 6th, 2021] [Originally Added On: June 6th, 2021]
- A problem called fiery federalism - The Times of India Blog [Last Updated On: June 6th, 2021] [Originally Added On: June 6th, 2021]
- Centre's Tussle With Bengal Over Chief Secretary Reeks of Uncooperative Federalism - The Wire [Last Updated On: June 6th, 2021] [Originally Added On: June 6th, 2021]