The Flypaper Effect and Desirable Legislative Changes to Local Government Financing Systems

2021 ◽  
Vol 19 (3) ◽  
pp. 587-608
Author(s):  
Beata Guziejewska ◽  
Anna Majdzińska ◽  
Agata Żółtaszek
Keyword(s):  
Local Government ◽  
Government Spending ◽  
Government Funding ◽  
Tax Revenue ◽  
Flypaper Effect ◽  
Intergovernmental Transfers ◽  
The Public ◽  
Government Financing ◽  
Research Findings ◽  
Legislative Changes

A substantial portion of local government funding in Poland comes from intergovernmental transfers. It may lead to the flypaper effect, which means that external revenues contribute to greater local government spending than locally-collected revenues. This study analyses how different revenue categories influenced local government spending in Poland between 2009 and 2018. Panel econometric models are used to test a hypothesis about whether the flypaper effect occurred in that period and to identify the potential causes. The results confirm to some extent that all three levels of local government were affected by the flypaper effect, and they point to intergovernmental transfers (general grants, specific grants, and shares of corporate income tax revenue) as the main causes. The research findings can be of use in reforming local government funding legislation in Poland and other countries, especially when the size of the public sector and public spending need to be reduced.

Eurozonization of the Chinese Economy: How Do Intergovernmental Transfers Affect Local Government Debt in China?

2018 ◽  
Vol 17 (1) ◽  
pp. 1-18 ◽  
Author(s):  
Ming Lu ◽  
Huiyong Zhong
Keyword(s):  
Local Government ◽  
Government Debt ◽  
Chinese Economy ◽  
Fiscal Sustainability ◽  
Intergovernmental Transfers ◽  
Fiscal Transfers ◽  
Coastal Cities ◽  
Government Financing ◽  
Per Capita

China's local government debt has risen dramatically bringing risks to China's fiscal sustainability and long term economic growth. Using urban construction investment bonds (UCIBs) issued by local government financing vehicles (LGFVs), we study how intergovernmental fiscal transfers impact the issuance of UCIBs under China's unitary currency system. Applying instrumental variable estimation, we find that special-purpose fiscal transfers per capita are positively associated with the issuance of UCIBs. A one-RMB increase in special-purpose fiscal transfers per capita is associated with an increase in the issuance of UCIBs per capita of 0.282 RMB, whereas regular fiscal transfers (including tax rebates and general fiscal transfers) do not affect the issuance of UCIBs. Furthermore, the effect of special-purpose fiscal transfers on the issuance of UCIBs mainly exists in inland cities rather than coastal cities. This imposes risks of “eurozonization” for the Chinese economy. We also find a deterioration of refinancing in terms of issuing more UCIBs.

scholarly journals A Comparative Approach to Fiscal Illusions: a Synthesis of the Conclusions from a Polish Study in Relation to New Ideas and Empirical Research in Selected Countries

2021 ◽  
Vol 24 (2) ◽  
pp. 7-21
Author(s):  
Beata Guziejewska
Keyword(s):  
Local Government ◽  
Empirical Studies ◽  
Government Funding ◽  
Comparative Approach ◽  
Future Research ◽  
Research Approach ◽  
Intergovernmental Transfers ◽  
Fiscal Illusion ◽  
Research Perspective ◽  
New Ideas

This article examines fiscal illusions in public finance systems where decentralisation involving the introduction of an independent and autonomous component of local government funding brings new problems. It presents a synthesis of the findings from a Polish empirical study that set out to determine the types and extent of fiscal illusion among Polish councillors, focusing on the qualitative aspects of the phenomenon. It also compares the findings with other streams of research and new approaches to fiscal illusion. The purpose of the article is to systematise the knowledge of fiscal illusion based on selected empirical studies, to formulate proposals for practitioners and public decision‑makers, and to highlight areas for future research to address. The article was prepared using a desk research approach and the author’s own experiences and research perspective formed during the study of fiscal illusions. The findings presented in the article corroborate its main thesis that a local government funding system based on intergovernmental transfers contributes to the emergence and perpetuation of fiscal illusions.

scholarly journals Apakah fenomena flypaper effect asimetris terjadi pada kebijakan belanja pemerintah daerah?

2021 ◽  
Vol 3 (1) ◽  
pp. 72-80
Author(s):  
Adhipradana Prabu Swasito
Keyword(s):  
Local Government ◽  
Government Spending ◽  
Central Government ◽  
Public Spending ◽  
Government Revenue ◽  
Flypaper Effect

Fluctuation in local government revenue will shift local government spending. This study aims to identify and analyze the response of local government spending policies to an increase or decrease in transfer funds from the central government (Balance Fund) and local own revenue (known as Pendapatan Asli Daerah). The study utilizes data from provincial governments throughout Indonesia for the 2010-2019 period. This study finds that local government spending policies are more responsive to increases or decreases in local government revenues in the form of DAU, meaning that there is a flypaper effect phenomenon. In addition, this study also found that the decline in DAU also caused a contraction in public spending, which means that there is no asymmetrical flypaper effect.   Kenaikan atau penurunan pendapatan pemerintah daerah akan meningkatkan atau menurunkan belanja pemerintah daerah Tujuan dari penelitian ini adalah untuk mengidentifikasi dan menganalisis respons kebijakan belanja pemerintah daerah terhadap kenaikan atau penurunan dana transfer dari pemerintah pusat (Dana Perimbangan) dan Pendapatan Asli Daerah. Penelitian menggunakan Penelitian ini menemukan bahwa kebijakan belanja  pemerintah daerah lebih responsif terhadap kenaikan atau penurunan penerimaan daerah berupa DAU, artinya ada fenomena flypaper effect pada kebijakan belanja publik di Indonesia. Selain itu, penelitian ini juga menemukan bahwa  penurunan penerimaan daerah berupa DAU juga menyebabkan kontraksi pada belanja publik, yang artinya flypaper effect yang ada tidak bersifat asimetris.      

Analisis Pengaruh Penerimaan Pajak Daerah Dan Retribusi Daerah Terhadap Pendapatan Asli Daerah Kabupaten/Kota Di Jawa Tengah

2015 ◽  
Vol 2 (1) ◽  
pp. 51-61
Author(s):  
Beta Asteria
Keyword(s):  
Local Government ◽  
Government Budget ◽  
Multiple Regressions ◽  
Independent Variables ◽  
Central Java ◽  
Directorate General ◽  
Fiscal Balance ◽  
Research Findings ◽  
Local Government Budget ◽  
The Impact

This research deals with the impact of Local Tax and Retribution Receipt to Local Government Original Receipt of Regency/City in Central Java from 2008 to 2012. This research utilizes the data of actual of local government budget from Directorate General of Fiscal Balance (Direktorat Jendral Perimbangan Keuangan). Methods of collecting data through census. The number of Regency/City in Central Java are 35. But the data consists of 33 of Regency/City In Central Java from 2008 to 2012. Total of samples are 165. Karanganyar Regency and Sukoharjo Regency were not included as samples of this research because they didn’t report the data of actual of local government budget to Directorate General of Fiscal Balance in 2009.The model used in this research is multiple regressions. The independent variables are Local Tax and Retribution Receipt, the dependent variable is Local Government Original Receipt. The research findings show that Local Tax and Retribution give the significant impact partially and simultaneusly on Local Government Original Receipt at real level 5 percent. All independent variables explain 91,90 percent of the revenue variability while the rest 8,10 percent is explained by other variables.Keywords: Local Tax, Retribution, and Local Government Original Receipt

The Reporting Entity in Private-Public Accounting Harmonisation. Is Control Enough for the Local Government Consolidated Financial Statements?

2017 ◽  
pp. 5-29 ◽  
Author(s):  
Cristian Carini ◽  
Laura Rocca ◽  
Claudio Teodori ◽  
Monica Veneziani
Keyword(s):  
Public Sector ◽  
Local Government ◽  
Accounting Standards ◽  
Financial Statements ◽  
Consolidated Financial Statements ◽  
The Public ◽  
Financial Accountability ◽  
Public Sector Accounting ◽  
Definition Of ◽  
Reporting Entity

The European Commission initiated a discussion on the expediency of using the International Public Sector Accounting Standards (IPSAS), based on the IAS/IFRS, as a common base for harmonizing the public sector accounting systems of the member states. However, literature suggests that accounting is not neutral with respect to the economic, social and political dimensions. In the perspective of evolution of the accounting regulation outlined, balanced between accountability, with the need to represent phenomena for reporting pur-poses, and decisionmaking issues, which concentrates on the quantitative importance of the values, the paper aims to analyse the effects of the application of different criteria for the definition of the reporting entity of the local government consolidated financial statements (CFS). The Italian PCA 4/4, the test of control and the financial accountability approaches are examined. The evidence that emerged from the case studies examined identifies several criticalities in the Italian PCA 4/4 and support the thesis that the financial accountability approach is more effective in providing a complete representation of the public resources entrusted to and managed by the group, whereas the control approach better approximates quantification of the group results in terms of central government surveillance. The analysis highlights the importance of the post implementation review period and the opportunity to contextualize the adoption of the consolidated financial statement in the broader spectrum of the accounting harmonization process, participating in the process of definition of the European Public Sector Accounting Standards (EPSAS).

PERIMBANGAN KEUANGAN ANTARA PEMERINTAH PUSAT DENGAN PEMERINTAH DAERAH DALAM PENGELOLAAN KEUANGAN DAERAH

2016 ◽  
Vol 42 (1) ◽  
pp. 1
Author(s):  
Edward Hutagalung
Keyword(s):  
Local Government ◽  
Central Government ◽  
Local Authorities ◽  
Fiscal Capacity ◽  
Regional Autonomy ◽  
The Public ◽  
Delegation Of Authority ◽  
Regional Authority ◽  
Local Sources ◽  
Tax Sharing

The fi nancial relationship between central and local government can be defi ned as a system that regulates how some funds were divided among various levels of government as well as how to fi ndsources of local empowerment to support the activities of the public sector.Fiscal decentralization is the delegation of authority granted by the central government to theregions to make policy in the area of   fi nancial management.One of the main pillars of regional autonomy is a regional authority to independently manage thefi nancial area. State of Indonesia as a unitary state of Indonesia adheres to a combination of elementsof recognition for local authorities to independently manage fi nances combined with the element oftransferring fi scal authority and supervision of the fi scal policy area.General Allocation Fund an area allocated on the basis of the fi scal gap and basic allocation whilethe fi scal gap is reduced by the fi scal needs of local fi scal capacity. Fiscal capacity of local sources offunding that comes from the area of   regional revenue and Tax Sharing Funds outside the ReforestationFund.The results showed that the strengthening of local fi scal capacity is in line with regional autonomy.

Corrupt Practices in the Public Health Sector: A Focus on Metropolitan Local Government Areas of Kano State, Nigeria

2020 ◽  
Vol 18 (2) ◽  
pp. 149
Author(s):  
Mohammed Mustapha Namadi
Keyword(s):  
Public Health ◽  
Local Government ◽  
Health Sector ◽  
Sampling Technique ◽  
Healthcare Services ◽  
Healthcare Sector ◽  
Healthcare Provision ◽  
The Public ◽  
Public Health Sector ◽  
The Government

Corruption is pervasive in Nigeria at all levels. Thus, despite recent gains in healthcare provision, the health sector faces numerous corruption related challenges. This study aims at examining areas of corruption in the health sector with specific focus on its types and nature. A sample size of 480 respondents aged 18 years and above was drawn from the eight Metropolitan Local Government Areas of Kano State, using the multistage sampling technique. The results revealed evidence of corrupt practices including those related to unnecessary-absenteeism, diversion of patients from the public health facilities to the private sector, diverting money meant for the purchase of equipment, fuel and diesel, bribery, stealing of medications, fraud, misappropriation of medications and unjustifiable reimbursement claims. In order to resolve the problem of corrupt practices in the healthcare sector, the study recommended the need for enforcement of appropriate code of ethics guiding the conduct of the health professionals, adoption of anti-corruption strategies, and strengthening the government monitoring system to check corruption in public health sector in order to ensure equitable access to healthcare services among the under-privileged people in the society.

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