Original scientific paper
https://doi.org/10.1080/1331677X.2015.1043780
The effectiveness of fiscal equalisation in Croatia
Marko Primorac
orcid.org/0000-0003-1629-3170
Abstract
The main objective of this paper is to examine the effectiveness of fiscal equalisation instruments in Croatia. Fiscal equalisation policy in Croatia is conducted through the personal income tax revenue sharing and the distribution of current grants from the central government budget to regional and local government units. However, the
application of these instruments often relies on criteria that are not economic in nature. Therefore, this paper tests the hypothesis of the ineffectiveness of fiscal equalisation system in Croatia. The Gini coefficients are used to measure inequalities in fiscal capacities of local government units before and after the application of fiscal
equalisation instruments. If the value of the Gini coefficient after the application of certain equalisation instrument is lower than before, that instrument is effective in alleviating fiscal inequalities and vice versa. It is found that the Croatian fiscal equalisation system mitigates local fiscal inequalities, but with the negligible effect.
Keywords
local government units; fiscal capacity; fiscal inequalities; fiscal equalisation; Gini coefficient; Croatia
Hrčak ID:
171515
URI
Publication date:
20.12.2015.
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