Fiscal Relations concerns economic decision-making in federal systems where different orders of government fund public-sector services. Intergovernmental fiscal relations include the structure of financial transfers between orders of government, the division of the tax room. These fiscal relations also determine requirements for how one order of government asserts influence over the decisions taken by another through financial means.
The emergence of a new “borderless” world economy and internal conflicts in some countries complicates fiscal relations by bringing new challenges to constitutional federalism. Moreover, various federal countries differ significantly in their choices as to the character of fiscal federalism, including a variety of tiers and their responsibilities and the associated fiscal arrangements. But, this diversity of experiences offers a tremendous opportunity for these countries to learn from each other to strengthen fiscal practice.