"…fiscal federalism is concerned with 'understanding which functions and instruments are best centralized and which are best placed in the sphere of decentralized levels of government'."
The system of financial relationships, transfers, and grants between levels of government that affect the distribution of revenue, spending, and taxation.
Definition of Fiscal Federalism: Fiscal federalism is a system of fiscal management where responsibilities for public expenditure and revenue are shared between different levels of government.
History of Fiscal Federalism: The evolution and development of the concept of fiscal federalism, including the historical context for the devolution of powers and responsibilities from the central government to regional and local governments.
The Role of Intergovernmental Relations: The mechanisms, processes, and institutions used to govern the relationships between different levels of government, including the sharing of responsibilities, powers, and resources.
Federalism and the Constitution: The constitutional framework and legal principles underpinning the logistics and governance of intergovernmental relations, including the distribution of powers and funding, and the balance of control and autonomy.
The Fiscal Structure of Government: The organization, budgetary systems, and the allocation of public resources across different levels of government.
Revenue Assignment and Sharing Mechanisms: The different mechanisms for sharing revenues between different levels of government, including grants, transfers, taxes, and fees.
Public Expenditure Assignment and Sharing: The different mechanisms for sharing and assigning responsibilities for public expenditure, including the allocation of funding, provision of services, and administration of policies.
Taxation Policy: The design of tax systems and the respective roles that different levels of government play in collecting, administering and regulating taxes.
Fiscal Transfers and Grants: The role and effectiveness of various forms of grants, subsidies and transfers between federal, state and local government, and their implications for service delivery, accountability, and transparency.
Budget Process: The budgetary process for allocating resources and responsibilities among different levels of government, including budget formulation, approval, implementation, and monitoring.
Inequalities and Distributional Concerns: Assessing the impact of fiscal federalism on the distribution of resources and opportunities, and measures taken to address regional and sectoral inequalities.
International and Comparative Perspectives: Comparing and contrasting fiscal federalism systems from around the world, and assessing the effectiveness of different forms of intergovernmental relations on service delivery, economic performance, and political stability.
Revenue Sharing: This type of fiscal federalism involves the sharing of revenue between the central and state governments. The central government shares a portion of its tax revenue with the state government to fulfill their monetary needs.
Grants-in-Aid: The central government provides grants to state governments to support a specific project or to address their particular program expenditure.
Mandates: In this type of fiscal federalism, the central government imposes a legal obligation on state governments to carry out certain tasks or projects.
Devolution: It means transferring power or authority from the central government to state governments. The state governments become more responsible for the use of their resources.
Contracts: The central government and the state governments enter into a contractual agreement for specific services, such as the defense sector.
Tax Incentives: In this type of fiscal federalism, the central government offers tax incentives to state governments to encourage economic growth.
Fiscal Equalization Formula: A formula is used to allocate resources to state governments based on some criteria, such as population size, per capita income, or expenditure needs.
Co-operative Federalism: It involves collaboration between central and state governments for the development and welfare of the country.
Constitutionally Determined Roles: The Constitution specifies the roles and responsibilities of the central and state governments for the provision of public goods and services.
Intra-state Fiscal Federalism: This type of Fiscal Federalism addresses the intergovernmental relations issues between local governments within a state. It means the distribution of resources amongst different local governments/bus depots.
"…the system of transfer payments or grants by which a central government shares its revenues with lower levels of government."
"A conditional transfer… involves a certain set of conditions… An unconditional grant is usually a cash or tax point transfer, with no spending instructions."
"The concept of fiscal federalism is relevant for every type of government: unitary, federal, and confederal."
"While 'fiscal federalism' is a set of principles that can be applied to all countries attempting 'fiscal decentralization', fiscal federalism is a general normative framework for assignment of functions to the different levels of government and appropriate fiscal instruments for carrying out these functions."
"Governor of Rivers State of Nigeria, Ezenwo Nyesom Wike said that he believes true fiscal federalism will 'strengthen the economy of his country as all sections will develop based on their comparative advantages'."
"Federal and non-federal countries differ in the manner in which such principles are applied."
"The goal of modern fiscal federalism is not just to ensure the efficient allocation of resources, but also to protect liberty and restrain the power of government, to share legislative and fiscal competencies, to foster political participation and preserve markets."
"Application differs because unitary and federal governments differ in their political and legislative context and thus provide different opportunities for fiscal decentralization."
"Over time, the theory of fiscal federalism has evolved considerably."
"Fiscal federalism constitutes a set of guiding principles, a guiding concept."
"Fiscal decentralization, on the other hand, is a process of applying such principles."
"The goal of modern fiscal federalism is… to protect liberty and restrain the power of government."
"The goal of modern fiscal federalism is… to foster political participation."
"The goal of modern fiscal federalism is… to ensure the efficient allocation of resources."
"If the lower level of government is to receive this type of transfer, it must agree to the spending instructions of the federal government."
"An example of this would be a federal equalization transfer."
"It is the study of how competencies (expenditure side) and fiscal instruments (revenue side) are allocated across different (vertical) layers of the administration."
"Federal governments use this power to enforce national rules and standards."
"The system of transfer payments or grants… shares revenues with lower levels of government."