0w2010 01 RESUM EJECUTIVO 03 DEFcarta ang
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Second Global Report on Decentralization and Local Democracy. GOLD 2010 EXECUTIVE SUMMARY
standards are set by different levels of government. A best practice in this area is to ban the creation of unfunded mandates across the different levels of administration, as in Denmark, for example. •
A rapidly ageing population is shifting, and will continue to do so, the demand for goods and services provided by local governments
The share in population of individuals aged 65 years or more is close to 16 percent on average in the European countries under examination in this chapter, which is among the highest in the world. The United Nations projects the old-age dependency ratio to nearly double during 2010-50. As a result, demand for health and old-age care will likely rise and delivery costs will put increasing pressure on local budgets. Demographic trends are particularly testing in southern Europe, where birth rates are well below replacement ratios and population growth rates (excluding immigration) are already negative. Immigration and the integration of long-term residents are creating claims on local budgets, especially in countries where the local authorities play a leading role in the provision (and financing) of housing, employment and related social assistance services, which are in high demand among immigrants. The proportion of foreign-born individuals in the population of Greece and Spain, for example, is already close to 10 percent. •
As in the case of local government expenditure functions, there are important differences in the assignment of revenue to local governments in Europe
Local government revenue, including local taxes, non-tax instruments (such as user charges and fees for services), intergovernmental grants and transfers, account for close to 10 percent of GDP on average in the countries
under examination. Local government revenue is much higher on average as a share of general government receipts in some unitary states, such as the Nordic countries (except for Norway), than in the federal countries, such as Germany. The relative shares of local government revenue are particularly low in some Southern European countries, including Cyprus, Greece, and Malta. A case can be made for relying on local taxes, rather than on revenue mobilized elsewhere, to finance the provision of local services. Such reliance tightens the link between the benefits and costs of local services, which is likely to make local officials more accountable to their taxpayers. Local governments are best equipped to tax immobile bases, because their revenue yield tends to be fairly insensitive to cyclical fluctuations in economic activity. As a result, property tax revenue accounts for a large share of local government receipts in several European countries, especially Belgium, France and Iceland. An important consideration is the extent of autonomy that local governments should have in tax matters. It can be argued that autonomy is beneficial, because it may enhance tax competition among the local governments, which may help to constrain increases in public spending and taxation. •
It is often difficult to draw a precise line between the various types of revenue accruing to local governments, especially in so far as own, shared or transferred revenue are concerned
This is the case of the personal and corporate income taxes, for example, whose revenue is often shared among different layers of administration, rather than being assigned exclusively to local governments. Another consideration is that formula-based revenue-sharing arrangements have the disadvantage of linking local government
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