The Study On The Intergovernmental Fiscal Relations Of German Federalism

Since1949until1990, the West Germany’s federalism experienced "the Unitarian Stage"(1949-1969) and "the Cooperative Stage"(1969-1990), which both had very close connections with "the Cooperative Federalism" and "the Functional Federalism". In the forty-one years, the German fiscal system witnessed such four adjustive periods of1949-1956,1956-1969,1969-1982and1982-1990, which eventually laid the basis of the German intergovernmental fiscal relations with characteristics of "appropriate concentration and relevent decentralization" which lasts up to now. The German fiscal institution, with the tax sharing system as "the preliminary distribution" and the intergovernmental fiscal equalization system as "the secondary distribution", has actually developed gradually following the traces of the German federalism.The intergovernmental fiscal relations with characteristics of "appropriate concentration and relevent decentralization" is essentially a kind of "reflection" of the German federalism, from "the political interwinement" in the German federalism to "the fiscal interwinement" of its fiscal institution. Such mode of "appropriate concentration and relevent decentralization" has some specific demonstrations:the federal government almost100%monopolizes the whole country’s fiscal legislation. At the same time, in order to ensure its ability of the macroeconomic regulation and coordination, the federal governmentwith controls the advantage of "relevant fiscal priority"-above50%of the fiscal resources in Germany. As "sub-national governments", all federal states, by their position of "the administrative axis" bestowed from the German federalism, have rights to collect and regulate the sharing tax, and are playing an indispensable role in its intergovernmental fiscal equalization system. During a long period, local governments have been pressured in the German fiscal system, which completely lose the ability to legislate and determine on issues concerning fields of fiscal and tax. Besides the common tax system which acounts for minority in the tax distribution, the local governments, such as cities, counties and towns only have control of the exclusive tax which belongs to themselves. Such condition of "fiscal incompetence" of the German local governments is due to the fact that their administrative and executive functions are far less important than those of the federal states under the principle of "the political interwinement"However, since the unification in1990, the German federalism have confronted with "double pressures" from the unification and the European integration, hence the call for reforming the German federalism no matter inside or outside of the national government is gradually rising. Under this background, the "black-red" grand coalition government with Angela Merkel as the prime minister began its first reform attempt to anti-"the political interwinement" as well as anti-"the fiscal interwinement" in2006. Afterwards, the second federal reform focusing on the fiscal issues was started in2009. However, until recently, the German federal reform(s) did not show apparent effects, whose main reasons are:firstly, there is a logical paradox for "the political actors" who try to settle "the political interwinement" in a "political interwinement" way; secondly, the political institution expresses a very obvious phenomenon of "path dependence effect" after its long operation process, which results in the interest groups utilize the "multi-veto points" network in the German federalism so as to oppose to the relevent radical reform agenda; thirdly, there is a strong wave of "the unitary political culture" in Germany, which leads to all "political actors" in favour of seeking consensus, but eliminating differences.In sum,"the fiscal interwinement" in German intergovernmental fiscal system has connect with "the political interwinement" of German federalism. The dissertation recognizes the shaping effect of the German federalism upon on its intergovernmental fiscal relations. The former provides the latter with the powers relations, the organization foundation, and confines its development model and the policy choice. Meanwhile, there is a reverse influence of the German intergovernmental fiscal relations upon on the German federalism, which adjusts to latter’s operation logic of the "joint-decision making", and integrated multiple needs of the federal, state, local governments. Although the German intergovernmental fiscal relations mode of "appropriate concentration and relevent decentralization" has its advantages, its problems also cannot be ignored, thus it needs to be reformed continuously in order to develop and improve.