Fiscal relations across levels of government - Sean DOUGHERTY, OECD

The OECD’s Fiscal Network

Sean M. Dougherty Senior Advisor

OECD Network on Fiscal Relations Across Levels of Government

SBO Asia Meeting 14-15 December 2017

The OECD Fiscal Network

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• Shares experiences on all aspects of fiscal federalism and sub-national public finance, on both the revenue and spending sides of the budget

• Annual Network meetings, as well as workshops and expert seminars

• Unique policy analysis, database and reports

• Membership-based: most Federal OECD countries, unitary countries that are more decentralised; non-OECD members are welcome

• Collaborates with multiple directorates at the OECD

OECD countries follow various models

3 Source: OECD (2018, forthcoming)

SNGs spending: one-quarter of total public spending, i.e. 9% of GDP

AUT

BEL

BGR

HRV

CYP

CZE

DNK

EST

FIN

FRA

DEU

GRC

HUN

ISL

IRL

ITA LVA LTU

LUX

MLT

NLD NOR

POL

PRT

ROU

SVN SVK

ESP SWE

CHE

GBR

ARG

BRA

CHL

COL

CRI DOM

ECU SLV

GRM

HND

JAM

MEX

PRY

PER

ISR

JOR

PSE TUR ALB

ARM

AZE

GEO

KAZ

KGZ

MDA

MNE

RUS

SRB

UKR

AGO BEN

BFA

CPV

COG

GHA

GIN

KEN

MWI

MLI MUS

MAR

NGA

UGA

SEN

ZAF

TZA

TCD

TUN

ZWE

AUS

KHM

CHN

IND

IDN JPN

KOR

MYS

MNG

NZL

PHL THA

VNM

CAN

USA

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0% 5% 10% 15% 20% 25% 30% 35% 40%

SNG

exp

endi

ture

as

% o

f pub

lic

expe

nditu

re

SNG expenditure as % of GDP

Why decentralise? To promote sub-national government performance

5 Source: OECD Fiscal Federalism (2018)

Central governments can help sub-nationals to enhance public sector productivity

Aligning responsibilities

• Based on a recent synthesis of reviews:

1. better align sub-central spending with own-source revenue;

2. delineate responsibilities and functions clearly; 3. raise sub-central spending power and autonomy

and reduce the scope of earmarked grants; 4. maintain and strengthen internal markets; 5. devolve some responsibilities to private-sector

service providers; 6. strengthen intergovernmental information and co-

ordination systems.

6 Source: OECD (2018), Synthesis of Fiscal Federalism Survey Chapters

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RECENT POLICY ANALYSIS Decentralisation and inequality: Do decentralised

countries grow more or less equal? And are regional disparities larger?

The taxation of immovable property: What is a “good” property tax, and how can property tax reform be successfully implemented?

Debt monitoring and management: Should central government monitor sub-national debt, and if so, what are the preferred instruments?

Fiscal constitutions: Do constitutional frameworks affect fiscal policy? How conducive are they to long-term growth?

Decentralization, education, and growth: Do decentralised countries invest more and grow faster? And do their students perform better?

Sub-central fiscal rules: How to design sub-central fiscal rules that foster stable and sustainable public finances and inclusive growth?

Website: http://oe.cd/fiscalnetwork

Email: [email protected]

New Asia Roundtable on 18-19 Dec in Seoul

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• Share knowledge of policy issues of fiscal relations across levels of government with policymakers and experts

• Comparative analysis of fiscal federalism with Asian and OECD countries

• Publish and share the results of the workshop to improve regional policies

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