THE TRADITIONAL APPROACH TO THE INCIDENCE OF PROPERTY TAX IS THAT THE OWNERS OF PROPERTY, EXCEPT FOR OWNER-OCCUPIERS, SHIFT THE BURDEN ON TO TENANTS AND CONSUMERS. THIS VIEW IS CHALLENGED BY THE NEW VIEW THAT ALL PROPERTY OWNERS PAY THE TAX. TE NEW VIEW FOCUSES ON THE INCIDENCE OF THE TAX IN THE COUNTRY AS A WHOLE. PERHAPS THE EFFECTIVE RATE OF PROPERTY TAXATION IN CANADA IS LESS THAN THAT IN THE U.S.
In this paper the methods and conclusions of the extensive literature attempting to measure fiscal centralization and fiscal balance in federal states are reviewed, focusing on the six developed-country federations. The conclusion is that the empirical evidence is unclear and that the attempt to derive simple quantitative measures of such complex concepts is more likely to obscure than to illuminate reality.
Extensive decentralization, both political and fiscal, is taking place in many of the countries newly emerging from behind the socialist veil. Decentralization represents both a reaction from below to the previously tight political control from the center and an attempt from above to further the privatization of the economy and to relieve the strained fiscal situation of the central government. Although there are of course many variations in this process from country to country, some important common elements arise from the similar institutional starting point in all countries and the common transitional problems most of them are facing. The on-going reforms of subnational finance in the transitional economies are more important than seems generally to be recognized. The design of a well-functioning intergovernmental fiscal system is key to many of the major reform goals of the transition economies—macroeconomic stability, privatization, and the social safety net.
