Search

The aim of this paper is to propose a model of fiscal equalization in Croatia. This paper tests the hypothesis of a lack of effectiveness of the existing fiscal equalization model compared to a model that would be based on alleviating the difference in the potential to collect revenue from the personal income tax and surtax. Fiscal inequalities of local government units are determined first under the current equalization system by calculating the Gini coefficients and graphically presented with Lorenz curves. Thereafter, a distribution of equalization grants is simulated based on the new (proposed) model. The effectiveness of the proposed model in alleviating the fiscal inequalities is determined in relation to the effectiveness of the current equalization system. It was found that the model based on equalizing the difference in the capacity to collect revenue from the personal income tax and surtax alleviates inequalities in fiscal capacities of local government units much better than the existing system at the same cost. The main conclusion is that the fiscal equalization in Croatia should urgently be redesigned in order to improve efficiency and fairness, but also the transparency and credibility of the equalization system.

The aim of this paper is to propose a model of fiscal equalization in Croatia. This paper tests the hypothesis of a lack of effectiveness of the existing fiscal equalization model compared to a model that would be based on alleviating the difference in the potential to collect revenue from the personal income tax and surtax. Fiscal inequalities of local government units are determined first under the current equalization system by calculating the Gini coefficients and graphically presented with Lorenz curves. Thereafter, a distribution of equalization grants is simulated based on the new (proposed) model. The effectiveness of the proposed model in alleviating the fiscal inequalities is determined in relation to the effectiveness of the current equalization system. It was found that the model based on equalizing the difference in the capacity to collect revenue from the personal income tax and surtax alleviates inequalities in fiscal capacities of local government units much better than the existing system at the same cost. The main conclusion is that the fiscal equalization in Croatia should urgently be redesigned in order to improve efficiency and fairness, but also the transparency and credibility of the equalization system., Cilj rada je predložiti model fiskalnog izravnanja u Hrvatskoj. U radu se testira hipoteza o nedovoljnoj učinkovitosti postojećeg modela fiskalnog izravnanja u odnosu na model koji bi se temeljio na ublažavanju razlika u potencijalu prikupljanja prihoda od prireza i poreza na dohodak. Izračunom Ginijevih koeficijenata najprije se utvrđuju nejednakosti u raspodjeli fiskalnih kapaciteta po stanovniku jedinica lokalne samouprave u postojećem sustavu izravnanja koje se prikazuju i grafički Lorenzovim krivuljama. Potom se provodi simulacija raspodjele pomoći za fiskalno izravnanje na temelju novog (predloženog) modela te se testira njegova učinkovitost u ublažavanju fiskalnih nejednakosti. Utvrđeno je kako model utemeljen na ublažavanju razlika u kapacitetu prikupljanja prihoda od prireza i poreza na dohodak u znatno većoj mjeri od postojećeg sustava ublažava razlike u fiskalnim kapacitetima jedinica lokalne samouprave uz isti trošak. Zaključak je da fiskalno izravnanje u Hrvatskoj hitno treba restrukturirati kako bi se poboljšala učinkovitost i pravednost, ali i transparentnost i vjerodostojnost sustava izravnanja.