Comparative Fiscal Federalism. Lessons to be Learned for the EU

On this project

Reacting to the financial and sovereign debt crises, the EU and its Member States introduced a number of measures that may develop into a system of fiscal federalism as known from federal states. This development and the accompanying debates about sustainability, stabilisation, growth and the setting of right or wrong incentives form the backdrop of this project.

Research is divided in two steps: In step one we aim at a detailed analysis of fiscal federalisms in Australia, Austria, Belgium, Canada, Germany, Switzerland, and the USA. These seven federations may possibly function as a model for the EU. Experts from these countries, providing inside knowledge of economy, history, politics and law and grouped around a SCEUS based core comprised of Stefan Griller (project leader), Florian Huber, and Sonja Puntscher Riekmann, will analyse the development paths of the respective fiscal federal systems, pertinent political quarrelling, economic and societal consequences, issues of efficiency, transparency and democratic back-coupling, etc., thus providing for a sound understanding of fundamental problems of fiscal federalism across borders.

Step two will provide a similar analysis of the current EU. This will be a rather complex challenge, because the Union neither has a coherent system of financial relations between its levels that deserves the name nor fiscal resources that enables it to provide substantial solutions for severe crises.

Finally, based on the results of both steps one and two, we will develop suggestions for instruments of fiscal federalism in the EU that are efficient in day-to-day political practice and can be expected to preclude future sovereign debt crises as well as grant a fair distribution of fiscal burdens and revenues, while at the same time securing a level of democratic control that can be expected from a 21st century developed polity.