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The outlook for the finances of local authorities in France

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  • Emmanuelle Taugourdeau

    (ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

  • Juliette Kies

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

The decentralisation process begun in the 1980s has regularly broadened the scope of local authorities' responsibilities, and therefore their expenses. Meanwhile, their financial situation has deteriorated, deepening the inequalities between territories. Is this trajectory in local public finances still tenable ? At present, this question is a burning issue, especially since President Emmanuel Macron announced the abolition of the residence tax, bringing budget balancing difficulties of local authorities to the forefront. This brief presents an overview of the finances of local authorities and the basic principles of local taxation, in order to examine the issues around equality between territories in the future. Externalities, horizontal and vertical tax competition, budgetary discipline and equalisation mechanisms are all key components in analysing the current situation in France. However, in a period of decentralisation, which equals territorial autonomy, local taxation is not enough to offset the profound disparity between communities. Today, more structural actions must be implemented to correct the imbalance between territories.

Suggested Citation

  • Emmanuelle Taugourdeau & Juliette Kies, 2019. "The outlook for the finances of local authorities in France," Institut des Politiques Publiques halshs-02515779, HAL.
    • Handle: RePEc:hal:ipppap:halshs-02515779
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02515779
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    References listed on IDEAS

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    1. Alain Guengant & Guy Gilbert, 2004. "Évaluation de la performance péréquatrice des concours financiers de l'État aux communes," Post-Print halshs-00078452, HAL.
    2. Frédéric Chabellard & Laurent Guihéry, 2005. "Contrainte budgétaire forte ou relâchée : revue théorique et expériences fédérales au Canada et en Allemagne," Post-Print halshs-00118454, HAL.
    3. Guy Gilbert & Alain Guengant, 2004. "Évaluation de la performance péréquatrice des concours financiers de l'État aux communes," Économie et Statistique, Programme National Persée, vol. 373(1), pages 81-108.
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