Revenue Sharing In Government And Intergovernmental Fiscal Relations

Revenue sharing is not however without pitfalls.

Revenue sharing in government and intergovernmental fiscal relations. The approach chosen can have implications for the criteria of financial support for the autonomy of constituent units for certain economies of scale and for fiscal stabilization. This act is called the intergovernmental fiscal relations act 1997 and takes effect on 1 january 1998. Tax sharing this avoids the problems arising from extreme subnational independence in tax policy but severely restricts subnational fiscal autonomy. 2 the sources of revenue for federal state and local governments are detailed in figure 3.

5 3 tax sharing versus fiscal transfers federations differ in their approaches to tax sharing versus trans fers. Revenue sharing on a tax by tax basis led to highly varied levels of efficiency in tax administration. Microsoft word intergovernmental fiscal relations act no. Revenue sharing and allocation of money in terms of section 214 of.

The expansion of the federal government s spending power has enabled it to transfer more grant money to lower government levels which has accounted for an increasing share of their total revenue. The essence of common pool problems 13 is that as suggested above local revenue mobilization is limited at the subnational level and revenue sharing is an important mechanism to correct vertical imbalances in intergovernmental fiscal relations. 97 of 1997 as amended doc.