Fiscal Federalism: a Solution for the European Union during the Crisis?

• Author: Adina Trandafir, Luminita Ristea
• Pages: 405-410

Fisca

Euro

A

1

Spiru Haret University, F

2

Spiru Haret University, F

Abstract

: Addressing the cumb

fiscal federalist its architecture. F

redistribution of p olitical respon

capacity of a system compared

organizational structure, as the

comparison helps to establish pr

federalist is not the most importa

Keywords: redi

stribution of poli

1. Introduction

Theory of fiscal federalism, is

Exhaustively examining this issu

"The traditional theory of fiscal f

functions at different levels of

functions" (Richard Musgrave,

19

government at federal and regio

federal tax system provides usua

ones), stabilization (anti-

cyclical

by a common shock) and the risk

are specific to the region hit by

example, von Hagen and Eiche

Bloechliger et al, 2010), even th

The euro area is facing a crisis qu

1

These are the three models of legitim

solving entity, the model community o

political rights.

Performance and Risks in the

scal Federalism: a

Solution for the

uropean Union

during the Crisis?

Adina Trandafir

1

, Luminiţa Ristea

2

y, Faculty of Financial and Accounting Managemen

atrandafir04@yahoo.com

y, Faculty of Financial and Accounting Managemen

luminita.ristea@consultingr.ro

bersome state

-

level fiscal crisis in the EU can be made and

e. Fiscal federalism is, in ter alia one of the principles of Eu rop

ponsibilit

ies between independent countries. This article su r

ed to that of the EU fiscal capacity of a system from a sta

he U.S., addressing eight areas in crisis prevention

and com

priorities for the European fiscal system, leading to the concl

rtant measure to be adopted to combat state

-

level fiscal crisis i

olitical responsibility

; tax policy; fiscal crisis

is how best allocation of tasks at different lev

issue would reach areas such as politics, sociol

ogy

al federalism establishes a general legal framework

of government and appropriate fiscal instrumen

1959, Oates, 1972 cited in Oates, 1999: 1121). The

gional levels and through direct fiscal transfers b

sually redistribution (permanent transfers from rich

al policies adopted federal government tax when all

isk

-

sharing transfers (temporary when only one regi

by

a shock). In practice, various forms of fiscal

chengreen, 1996, Ahmad and Brosio, 2006; Gich

though the United States has always been primary

quite pronounced, although the overall fiscal situa

timacy of the Europ ean fiscal p olicy presented i n the literatu

of shared values as sources of legitimacy and the EU as a

the European Economy

405

ent, Constanţa,

ent, Constanţa,

and on the lack of a

ropean fiscal policy,

survey the p otential

state with a federal

combating tax. This

nclusion that a more

is in the EU.

levels of government.

ogy, national identity

1

.

rk for the allocation of

ents to achieve these

The fiscal operations of

s between regions, the

icher r

egions to poorer

all regions are affected

egion and some regions

cal federation (see, for

ichiru et al, 2009; or

ary point of reference

.

uation and prospects in

ature: the EU as a problem

s an entity model based on