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FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA FISCAL FEDERALISM IN ARGENTINA•ERNESTO REZK•DIRECTOR•ernerezk@eco.unc.edu.ar•INSTITUTE OF ECONOMICS AND FINANCE•FACULTY OF ECONOMIC SCIENCES•NATIONAL UNIVERSITY OF CORDOBA•www.eco.unc.edu.ar/ief/index.htmFISCAL FEDERALISM IN ARGENTINA•MAIN FEATURES•ARGENTINA IS A THREE-TIERED FEDERATION•CONSTITUTION GRANTS AMPLE TAXING AND SPENDING POWERS TO ALL THE THREE LEVELS•SUBNATIONAL LEVELS INCLUDE 24 PROVINCES AND 1,100 MUNICIPALITIESFISCAL FEDERALISM IN ARGENTINA•IS IT ARGENTINA ONLY A ‘FORMAL’ FEDERATION?•MARKED TAX COLLECTION CONCENTRATION•FAIRLY AMPLE SPENDING DECENTRALIZATIONFISCAL FEDERALISM IN ARGENTINA•VERTICAL IMBALANCE -2001•(millionofcurrent pesos)•NATION PROVINCES•REVENUE 36,532,1 29,982,1•SPENDING* 35,076,8 32,487,5•SUP-DEFIC. 1,455,3 -2,595,4•(*) Exclusive ofInterest PaymentsFISCAL FEDERALISM IN ARGENTINA•VERTICAL IMBALANCE -2001•(millionofcurrent pesos)•NATION PROVINCES•REVENUE 36,532,1 29,982,1•SPENDING* 45,251,4 35,155,5•SUP-DEFIC. -8,719,3 -5,263,4•(*) Inclusive ofInterest PaymentsFISCAL FEDERALISM IN ARGENTINA•PROVINCIAL REVENUES -2001•(millionofcurrent pesos)•PROVINCES´OWN TAXES 9,850,8 33.1%•REVENUE SHARING SYSTEM 15,763,3 52.7%•CURRENT TRANSFERS 1,174,7 3.9%•OTHER CURRENT REVENUES 2,672,2 8.9%•CAPITAL REVENUES 427,1 1.4%•TOTAL REVENUES 29,892,1FISCAL FEDERALISM IN ARGENTINA•PROVINCIAL TAX REVENUES -2001•(per centshare)•TURNOVER TAX 55.69%•PROPERTY AND LAND TAX 16.83%•CAR TAX 8.47%•OTHER TAX REVENUES 19.01% FISCAL FEDERALISM IN ARGENTINA•HORIZONTAL FISCAL IMBALANCE -2001•POPUL. GDP GDPpc TAX REV.••B. Aires 13,756,0 96,965,9 7,049 3,648 0.370•C.of B.Aires 2,729,4 68,695,3 25,168 2,490 0.253•Córdoba 3,052,7 24,174,7 7,919 815 0.083•Santa Fé 2,976,0 22,885,2 7,690 781 0.079•Mendoza 1,573,7 12,140,8 7,715 357 0.036•19 provinces 11,950,1 68,467,5 5,729 1,760 0.179FISCAL FEDERALISM IN ARGENTINA•TOTAL SPENDING BYGOVERNMENT LEVEL•NAT. GOV. PROV.MUNICIP.•Admin. Lawand•Order 56.0% 36.0%8.0%•Social andHuman•ResourcesSpending 34.0% 64.0%2.0%•Economic Spending 57.0% 40.0%3.0%•Public Debt 81.0% 17.0%2.0%FISCAL FEDERALISM IN ARGENTINA•MAIN PROBLEMS•SUBNATIONAL LEVELS DO NOT MEET PRINCIPLE OF FINANCIAL AUTONOMY•EXISTING INTERJURISDICTIONAL FISCAL ARRANGEMENTS DO NOT ENHANCE SUBNATIONAL LEVELS’ ACCOUNTABILITYFISCAL FEDERALISM IN ARGENTINA•MAIN PROBLEMS•CONTINUOUS ‘BAIL OUT’ TO SUBNATIONAL BORROWING FAVOURS UNWISE BUDGETARY BEHAVIOURS AND EXCESSIVE PUBLIC SPENDING•PUBLIC EMPLOYMENT PRACTICES RUN COUNTER EFFECTIVE PROVISION OF PUBLIC GOODS AND SERVICESFISCAL FEDERALISM IN ARGENTINA•STOCK OF SUBNATIONAL PUBLIC DEBT 2001•(millionof u$s dollars)•BUENOS AIRES 6,040 TUCUMAN 1,370CHACO 1,660 RIO NEGRO 1,250•CORDOBA 1,590 MISIONES 1,200 •MENDOZA 1,410 E. RIOS 1,100•FORMOSA 1,400 C.B.AIRES 850•REST 8,230 TOTAL 26,100FISCAL FEDERALISM IN ARGENTINA•STOCK OF SUBNATIONAL PUBLIC DEBT IN RELATION TO REVENUES -2001•BUENOS AIRES 66% TUCUMAN 133%CHACO 179% RIO NEGRO 184%•CORDOBA 66% MISIONES 154% •MENDOZA 104% E. RIOS 98%•FORMOSA 231% C.B.AIRES 26%FISCAL FEDERALISM IN ARGENTINA•SUBNATIONAL PUBLIC EMPLOYMENT 2002•Employees E/1000 ∑wages/Rev••Córdoba 76,100 24.9 55.3•Buenos Aires 438,000 28.0 72.7 •Santa Fé 104,500 33.0 61.7•Mendoza 63,250 35.0 64.8•C.B.Aires 112,500 37.5 FISCAL FEDERALISM IN ARGENTINA•SUBNATIONAL PUBLIC EMPLOYMENT 2002•Employees E/1000 ∑wages/Rev•Neuquen 36,500 65.2 56.9 •Formosa 33,700 68.2 72.7•Catamarca 23,800 70.0 54.4•La Rioja 23,250 89,2 60.8•Santa Cruz 17,400 90.5 44.4•All prov. 1,471,650 40.8FISCAL FEDERALISM IN ARGENTINATHE ENHANCEMENT OF FISCAL FEDERALISM IN ARGENTINA CALLS FOR THE ENSUING MATTERS TO BE URGENTLY ADDRESSED:FISCAL FEDERALISM IN ARGENTINAA. TO MEET THE CONSTITUTIONAL MANDATE OF A NEW INTER JURISDICIONAL FISCAL ARRANGEMENT FISCAL FEDERALISM IN ARGENTINAB. TO AIM AT ENHANCING SUBNATIONAL LEVELS’ ACCOUNTABILITYBY:•INDUCING THEM TO EXERCISE THEIR FISCAL FACULTIES•STRENGTHENING THEIR TAX COLLECTION CAPABILITIESFISCAL FEDERALISM IN ARGENTINAC. TO INTRODUCE SOME DEGREE OF DISCIPLINE IN SUBNATIONAL BORROWINGBY:•STOPPING BAILOUTPRACTICES•USING SOME VARIETIES OF COOPERATIVE OR RULES-BASED APPROACHES TO SUBNATIONAL BORROWINGFISCAL FEDERALISM IN ARGENTINAD. TO IMPROVE GOVERNANCE IN SUBNATIONAL LEVELSBYINDUCING THEM TO:•RESORT TO MORE TRANSPARENT BUDGETARY PRACTICES•TO RELEASE RELIABLE AND COMPLETE INFORMATION ON TAX AND SPENDING FIGURESFISCAL FEDERALISM IN ARGENTINAE. TO FAVOUR UNCONDITIONAL TRANSFERS, IN PLACE OF CONDITIONAL TRANSFERS (‘PRINCIPAL-AGENT’ RELATIONS), SPECIALLY IF THE POSSIBILITY OF OCURRENCE OFASYMMETRIC INFORMATION ANDMORAL HAZARD IS HIGH