Local Government Finance in Germany
| Published date | 01 October 1930 |
| DOI | http://doi.org/10.1111/j.1467-9299.1930.tb01995.x |
| Date | 01 October 1930 |
Local Government Finance
in
Germany
By
MAY
DHONAU.
B.A.
Acland
Travelling
Schohokv,
1928
SYNOPSIS
1.
National
and
Local
Taxation.
2.
Forms
of
the
Clod
Mixed
System”:
(a)
Direct
Ltvia;
(b)
The
Assignment System;
(c)
Additional Perccntagu.
3.
Prc~Wu
Taxation
:
(a)
Reich
and
Lands
;
(b)
Lands
and
Local
Authorities.
4.
The
Post-Wa~
System:
The
“
Financial
Adjustment”;
The
Distri-
bution
of
the
Sources
of
Taxation.
The
Present
Financial
Adjustment
been
Rach,
Lands.
and
Local
Authorities,
Particulur
of
the
Finencial
Adjart-
ment
:
Income
and
Corporations Tax
;
Ccneral
Turnover
Tax,
and
Corn
Tax
:
Land
Purchase
Tax; Automobiles Tax;
Betting
Tax and
Stamp
Land
Tax: Inacment
Value
Tax;
House
Rents Tax
:
Trade
Tax.
5.
The
Rcrdts
of
the
New
System.
6.
Other
Saurca
of
Revenue:
Fees
and
Dues;
Surplu~er
hm
Business Enterprises;
Crants-ii-Aid:
TaratiOn
of
Lower
Authorities.
7.
The
Finrrndal
Reso~~car
of
the
Various
Loal
~utho*ti-.
a.
-dimt.
9.
srSrmugandmtieirm.
I.
National and Local Taxation.
Gem theory
distinguishes
two
main
systems of national and
local
taxation, the
“
Independent System
”
(Trennsystem) whereby
the various authorities draw their
taxes
from different sources, and
the Mixed System
I’
(Mischsystem) whereby many sources axe
shared by Merent authorities.
As
regards state and
local
taxation
England
possesses
what most nearly approximates to an Independent
System, but
if
the hancial relations between the
local
authorities
themselves be considered, anything but
an
Independent System can
be said
to
exist.
Most other countries have Mixed Systems
in
varying
degrees and
in
various
forms.
The
Mixed
System
itself
may be
‘I
open
”
or
‘I
closed.”
If
open,
then authorities are
free
to
use
all
available sources
in
any manner and to any extent.
If
closed,
then
the taxation systems
of
the different
authorities
are brought
into
dehite
relationship.
Only
in
a
wealthy
country
like
the
USA.
can
anything approaching an
Open
Mixed
System prevail without totally
ruining
the national economy. Other
counlries
have to choose
between some
form of
the Closed Mixed System.
Forms
of
the
Closed
Mixed
System.
(a)
Direct
Levies.
Higher authorities may
tax
lower, leaving the latter
to
satisfy
the
needs
of
both
by taxation
of
the individual
citizens.
This
is
the
system
398
Local Governrnenf Finance
in
Germany
which
still
prevails
in
Prussia
so
far
as
the Provinces and Circles
are
concerned. According to the Circles and Provincial Revenues Law
of
1906,
the Provinces and Circles are entitled to cover those expenses
not met from other sources
of
income by precepts
on
the Circles or
Communes
as
the case may be. Prior to the war, the Reich itself
covered that expenditure for which duties and consumption taxes
proved insufficient by
raising
levies from the Lands (Matrikular-
Beitraege). The advantage of the system, especially
in
a land
of
many authorities such
as
Germany,
is
that it allows
taxes
to be raised
in
a lump
sum.
It
means, however, that the lowest authority has to
bear most of .the
odium
of taxation (a complaint frequently raised
by the German country communes since the war) and that, even
though
the levies are imposed according to the ability of the local
authorities to pay, yet
great
inequality
of
taxation must
still
occur
owing
to the different methods of taxation adopted by the various
authorities.
In
pre-war Prussia regulations concerning the relations
to be observed between real and personal
taxes,
though introduced
k
connection
with
other matters, did something
to
mitigate
this
dis-
advantage. These regulations have
now
been abolished but circum-
stances have
forced
local taxation into a mould very much more rigid
than anything
known
in
Germany before the war. Great variations
of
method cannot occur because
local
freedom
of
taxation
has
largely
disappeared.
(b)
The
Assignment
System.
In
exact contrast
to
this
system is that called
in
Germany the
Assignment System (Ueberweisungssystem) whereby the central
authority
raises
the most important
taxes
and, having subtracted
what it itself needs,
hands
over the remainder to the subordinate
authorities to
be
distributed among them according to some standard
connected with the
tax
itself. These
taxes,
given
in
Austria the
clearer title
of
Divided
Taxes,
are not assigned revenues in the
English sense, since they are not
as
a
rule
assigned
for
any
particular
purpose. They are simply
taxes
which
it
is thought expedient to
raise nationally even
if
they are
used
to
some extent locally.
This
system
has
not the disadvantages
of
the first but
possesses
none
of
its
advantages. The
taxes
are
raised
on
a
national basis and the evils
which are due to
lack
of
uniformity
do
not arise. The local authorities
are, however, curtailed
in
their financial freedom. They have
no
control
over what may
be
a
large part
of
their income,
no
power
of
adapting
it
to
local
needs and
no
security
that it
will
remain
similar
in
amount from one year to another. Even
if
the
taxes,
or
at
least
some of them, are distributed according to some standard related
to
need and not according
to
the amounts raised in the
districts
(in
which
399
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