Financial aspects of decentralisation

Author:Emilia Cornelia Stoica - Andrei Cristian Stoica
Position:Associated Professor, Ph.D., Faculty of Economic Sciences, ?Nicolae Titulescu' University - Ministry of Finance
Pages:216-222
SUMMARY

The objective of the decentralization process is better targeting of the financial resources, which translates into a lower tax price to financial cover the decentralized public services. In the current period, also in the European Union and in relations with other developed countries, there is an increasing mobility of people and economic activities. Wealthy individuals and firms are inclined to ... (see full summary)

 
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216 Lex ET Scientia. Economics Series
LESIJ NO. XVIII, VOL. 1/2011
FINANCIAL ASPECTS OF DECENTRALISATION
Emilia Cornelia STOICA*
Andrei Cristian STOICA**
Abstract
The objective of the decentralization process is better targeting of the financial resources,
which translates into a lower tax price to financial cover the decentralized public services. In the
current period, also in the European Union and in relations with other developed countries, there
is an increasing mobility of people and economic activities. Wealthy individuals and firms are
inclined to place their wealth or relocate their activities to lower taxation centers, while lower
income people tend to move into communities benefiting more generous social transfers.
Keywords: descentralisation, public finance, local authority, services, functions
Introduction. The event functions in the process of decentralization of public
finances
In modern theories of public finance, they are considered a basic factor for macroeconomic
development. Thus, according to Musgrave's theory, the public sector performs three essential
functions for the good of the state:
- affected function of resources
- redistribution function
- macroeconomic stabilization function of the activity.
At the national level, macroeconomic stability and growth targets imply the need for
sustained fiscal consolidation, and discipline in public spending, at all levels of government, which
is public or private, central or local.
The three functions of public finances is manifested differently in terms of administrative
and financial decentralization.
There are a great variety of administrative and financial systems adopted both in the
European Union and in the most developed contries in the world. Thus, although many countries
present three levels of administration – France (regions, departements and municipalities),
Germany (federal, landers, local), Italy (regions, provinces, communes), Spain (autonomous
communities, provinces, municipalities), Sweden (federal, län, kommuner), United Kingdom
(different for each hystorical region: England, Northern Ireland, Scotland and Wales) etc., there
are several countries, like Romania, where administrative organisation comprise only two levels.
This paper discusses the relationship between central and local administrative level, both
regarding their responsabilities and public financial - revenues and expenditures – correlation,
taking account by the type of decentalisation the country heve adoppted.
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*Associated Professor, Ph.D., Faculty of Economic Sciences, „Nicolae Titulescu” University (e-mail:
liastoica@gmail.com).
** Ministry of Finance (e-mail: andrei.cristian.stoica@gmail.com).

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