EFZG working paper series, No. 04, 2007.
Other
Fiscal system and fiscal relations in the European Union: political restraints and alternative approach to public finance
Hrvoje Šimović
orcid.org/0000-0002-4040-0899
; Faculty of Economics and Business, University of Zagreb
Abstract
Development of the European integration through the European Union (EU) considers not only
strengthening integration from the economic aspect (internal market). It also considers the political aspect
of the integration i.e. strengthening political integration of member states and their citizens. Political
segment of integration considers strengthening of the internal policies of the EU in which fiscal system, i.e.
public finances have extremely important role. The EU fiscal system presents reflection of the extremely
strong and often confronted interests between the economic and the political integration. These issues are
closely related to the second component of the European politic and economic integration, that are the
fiscal relations between the EU “central” level and the national “lower” levels which bring the all important
decisions in the EU. According to the theory of public finance (fiscal federalism) and the criteria of
economic efficiency, fiscal functions (allocation, redistribution, stabilization) and activities are assigned to
the different levels of government, as well as certain resources for their financing. On the basis of fiscal
functions carried out by national levels in the EU, and the manner of their financing, the EU is a
prominently fiscally decentralized complex community. The traditional approach to the fiscal federalism
that fiscal authorities are transferred from central to lover levels means that this is a process of
decentralization, while in the case of the EU this means centralization of fiscal authorities from the level on
national states to the EU as a supra-national level. The main goal of this paper is to analyze fiscal relations
in the EU according to basic fiscal functions: allocation, redistribution and stabilization. Methodology
would include analysis and comparison of positive EU aspect with normative aspect of public finances in
multi-level community. Induction of gained results will confirm thesis that, because of political restraints,
development of common (central) system of the EU public finances is based on alternative approaches of
harmonization and cooperation.
Keywords
fiscal system; fiscal relations; fiscal federalism; the European Union
Hrčak ID:
137195
URI
Publication date:
16.4.2007.
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