Intergovernmental fiscal relations - Three faces of tax sharing - II

Tax revenue sharing is probably the most important element of intergovernmental fiscal relations. This issue has three major dimensions, name, tax assignment between the federal and subnational governments, vertical tax revenue sharing between the federal and subnational governments and horizontal redistribution of shared tax revenue among the subnational governments. This paper discusses these three aspects of tax revenue sharing drawing upon the international experience in this area and proceeds to examine if certain broad principles could be established for universal application. [The paper is published in three parts. This is the second part.]