Public Services and Expenditure Need Equalization : Reflections on Principles and Worldwide Comparative Practices

This paper reviews the conceptual challenges as well as lessons from worldwide experiences in implementing public services and expenditure need compensation in fiscal equalization transfers with a view to developing guidance for practitioners. The...

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Bibliographic Details
Main Author:	Shah, Anwar
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCESS TO EDUCATION ACCOUNTABILITY AD HOC GRANTS ADJUSTMENT COEFFICIENT ANALYTICAL APPROACH ASYMMETRIC INFORMATION AUDITS AUTONOMY BLOCK GRANTS BUDGET ALLOCATIONS BUDGETARY ALLOCATIONS BUDGETARY AUTONOMY CAPITAL GRANTS CAPITALIZATION CENTRAL GOVERNMENT CHARTER SCHOOL CHARTER SCHOOLS CITIES COEFFICIENTS COMPARATIVE PERSPECTIVES DAYCARE DECENTRALIZATION DEMOGRAPHIC COMPOSITION DEMOGRAPHIC FACTORS DIFFERENTIALS DISTRICT DISTRICT GOVERNMENTS DISTRICTS ECONOMIC EFFICIENCY EDUCATION FINANCE ELECTRICITY ELEMENTARY SCHOOL EMERGING MARKET ECONOMIES EMPLOYMENT EMPLOYMENT STATUS EMPOWERMENT ENROLLMENT ENROLLMENTS EQUAL ACCESS EQUAL AMOUNTS EQUAL TREATMENT EQUALIZATION EQUITY GROUNDS EQUITY OBJECTIVES ETHNIC GROUPS EXPENDITURE EXPENDITURE CATEGORIES EXPENDITURE CATEGORY EXPENDITURE CLASSIFICATION EXPENDITURE NEED EXPENDITURE NEEDS EXPENDITURE PER CAPITA EXPENDITURE RESPONSIBILITIES EXPENDITURES FAMILIES FEDERAL CONSTITUTION FEDERAL COUNTRIES FEDERAL FINANCING FEDERAL OVERSIGHT FEDERAL PROGRAM FEDERAL REVENUE FEDERAL REVENUE SHARING FEDERAL TRANSFERS FEDERAL TRANSFERS TO PROVINCES FINANCES FINANCIAL REPORTING FISCAL DECENTRALIZATION FISCAL FEDERALISM FISCAL MANAGEMENT FISCAL TRANSFERS FIXED COSTS FORMULA GRANTS GARBAGE COLLECTION GENDER GRANT ALLOCATION GRANT DESIGN GRANT PROGRAMS HEALTH SERVICES HOUSING ILLITERACY INFLATION INSURANCE INTEREST COSTS INTERGOVERNMENTAL FINANCE INTERGOVERNMENTAL FISCAL RELATIONS INTERGOVERNMENTAL FISCAL TRANSFERS INTERGOVERNMENTAL RELATIONS INTERNATIONAL BANK LACK OF ACCESS LARGE CITIES LAWS LEGISLATION LEVEL OF GOVERNMENT LEVEL PLAYING FIELD LOCAL AUTONOMY LOCAL EXPENDITURE LOCAL EXPENDITURES LOCAL FISCAL CAPACITY LOCAL GOVERNMENT LOCAL GOVERNMENT AUTONOMY LOCAL GOVERNMENT EXPENDITURE LOCAL GOVERNMENT FINANCE LOCAL GOVERNMENTS LOCAL PUBLIC FINANCE MANDATES MATCHING GRANTS MIGRATION MINISTRY OF FINANCE MUNICIPAL MUNICIPAL EXPENDITURE MUNICIPAL EXPENDITURES MUNICIPAL GOVERNMENT MUNICIPAL GOVERNMENTS MUNICIPALITIES MUNICIPALITY NATIONAL BUDGET NATIONAL GOVERNMENTS PENALTIES POLICY CHOICES POLICY DECISIONS PRIVATE SECTOR PROPERTY TAX PROVINCE PROVINCES PROVINCIAL SPENDING PROVISIONS PUBLIC PUBLIC DOMAIN PUBLIC ECONOMICS PUBLIC EDUCATION PUBLIC EMPLOYEES PUBLIC EXPENDITURES PUBLIC FINANCE PUBLIC GOODS PUBLIC POLICIES PUBLIC POLICY PUBLIC SCHOOL PUBLIC SCHOOLS PUBLIC SECTOR PUBLIC SERVICE PUBLIC SERVICE DELIVERY PUBLIC SERVICE PROVISION PUBLIC SERVICES PUBLIC SERVICES IN RURAL AREAS PUBLIC SPENDING PUBLIC TRANSIT PUBLIC USE RECEIPT REFUGEES RESOURCE ALLOCATION RETIREMENT REVENUE SHARING REVENUE SOURCES ROADS SAVINGS SCHOOL FINANCE SINGLE MOTHERS SINGLE PARENT SINGLE PARENTS SOCIAL SERVICES SOCIAL WELFARE SPECIAL FUND STATE ECONOMIES STATE EXPENDITURES STATISTICAL ANALYSIS STREETS SUB-NATIONAL SUBNATIONAL SUBNATIONAL EXPENDITURES SUBSIDIARITY PRINCIPLE TAX TAX BASE TAX BURDEN TAX BURDENS TAX CAPACITY TAX EFFORT TAX EXPENDITURES TAX RATE TAX RATES TAXATION TAXPAYERS TELECOMMUNICATIONS TOTAL EXPENDITURES TRANSACTIONS COSTS TRANSPARENCY TRANSPORT TREASURY TUITION UNEMPLOYMENT UNEMPLOYMENT RATE UNION UNIONS UNIVERSAL ACCESS URBAN AREAS URBAN PUBLIC SERVICES URBANIZATION VOUCHERS WAGE DIFFERENTIALS WAGES WOMAN
Online Access:	http://documents.worldbank.org/curated/en/2012/03/15954847/public-services-expenditure-need-equalization-reflections-principles-worldwide-comparative-practices http://hdl.handle.net/10986/19875

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Summary:	This paper reviews the conceptual challenges as well as lessons from worldwide experiences in implementing public services and expenditure need compensation in fiscal equalization transfers with a view to developing guidance for practitioners. The paper concludes that while in theory a strong case for a comprehensive fiscal equalization can be made, in practice fiscal need equalization as part of a comprehensive equalization program introduces significant complexity. This works against the simplicity, transparency and general acceptability of the program. This does not imply that fiscal need equalization should be abandoned in the interest of simplicity and transparency. Instead simplicity, transparency and local autonomy are preserved by having fiscal need equalization through public service oriented (specific purpose block transfers) output based fiscal transfers that impose no spending requirements for any functions or objects of expenditures. Such transfers contrast with traditional earmarked transfers, which impose conditions on spending for specific purposes or objects of expenditure and subsequent verification/certification of such expenditures. Such output-based block transfers would further enhance citizen based accountability for results and thereby offer potential for enhancing public confidence and trust in government operations.

Public Services and Expenditure Need Equalization : Reflections on Principles and Worldwide Comparative Practices

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