Tag Archives: Fiscal

The justification for a decentralised system embodying provincial and other sub-national decision-making powers tends to be political. In Zimbabwean politics, as Bogdnor, V (2001) aptly puts it, “The issue of devolution has often been for polemic rather than reasoned analysis”. This has been the case with the Zimbabwean politics where perennial under achieving opposition parties have played the devolution card hoping to gain autonomy in regions where they thought their supporters reside. Not until ZAPU presented it. ZAPU presents devolution in a way that intends to benefit all Zimbabweans regardless of their political affiliations and tribal/ethnic background. In his earlier book Devolution, Bogdnor (1979) claims that devolution has three parts to it:
1.The transfer of power to a subordinate elected body.
2.The transfer of power on a geographical basis; and
3.The transfer of functions at present exercised by Parliament
In ZAPU literature, devolution essentially involves the setting up of an elected regional assembly/parliament whose powers are carefully and clearly defined by national government. The present system of government fears that autonomous provinces would decrease its ability to govern unchallenged and has used its repressive powers to entrench provincial disparities and divisive tribal politics: beg the dissident provinces policy. Puppet provincial leaders incapable of making autonomous rational decisions have been arbitrarily appointed and led by wimp ineffective ceremonial provincial governors.
Devolution of power includes division of public sector functions and finances amongst the different tiers of government, in short, fiscal federalism. The main emphasis being the need to focus on the necessity for improving performance of the public sector and the provision of its services by ensuring proper alignment of responsibilities and policy instruments.

FISCAL FEDERALISM AND ECONOMIC WELFARE
Fiscal federalism seeks to guide devolution by focusing on allocative efficiency and welfare maximisation. One of the arguments advanced for fiscal federalism is that the preferences and the needs of citizens and taxpayers for public sector goods and services are better known to the local government officials than to those who represent the central government. Therefore, local governments have more information about the needs and priorities of the citizens. While some services like defence are definitely national in nature, there are some which are local in nature like street lighting and a local radio station. Rural people should be able to utilise their local radio station to make announcement, look for their cattle or find a market for their garden produce.
This level of devolution enhances public participation in decision-making since provincial and local governments are closer to the communities they serve and this fosters fiscal accountability. Decentralisation places restrictions on the central government which, in Zimbabwe, has tended to exhibit monopolist tendencies by amassing political and economic power in a few hands and in one geographic area. Other regions and societies have been sustainably exploited and bagged since independence from Britain in 1980.
Centralisation forces a uniform mix of taxes and public spending; even though tastes and preferences in Beitbridge vary considerable from those of Nyamapanda. Bureaucratic inefficiency which emanates from large programmes being implemented in diverse geographic areas is also magnified by centralisation.
FISCAL FEDERALISM AND TAXATION
Fiscal federalism also looks at the abilities of sub-national governments and how the fiscal instruments are allocated across the different layers of government. Decentralisation of taxing and spending powers places a disciplinary check on the size of the government by forging a closer link between raising funds and spending funds. Deciding what the responsibilities of the national and sub-national governments is called assigning expenditures. It involves deciding which taxes, levies and licences should be collected by the central government and which ones should be left to the provinces. These decisions are never, and can never be precise or final. As a consequence, responsibilities and duties will always overlap. This means that the economic analysis of devolution should focus in determining the optimal jurisdictional authority. This, in practice, goes beyond purely economic considerations. Sub-national governments are politically or historically determined and may not coincide with the benefit areas of public goods and services. Spatial externalities exist between sub-national government boundaries. This raises the argument that the formation of provinces and districts should be informed by economic ability and need.
Studies and historical evidence does not provide clear guidelines as to which taxes and expenditures should be assigned to central or sub-national governments. Balance need to be struck between the need for efficiency and economies of scale and the harnessing of spatial externalities.

FISCAL FEDERALISM AND CORRUPTION
Poor governance and corruption are some of the thorny issues in Zimbabwe. Fears of corruption under a decentralised system are grounded on lack of capacity and transparency in government. ZAPU, as a government in waiting, is leading the way in capacity building, conducting workshops and training programmes in various leadership positions. Empirical evidence suggests that corruption is more widespread at provincial than at national level. This may be due to lower salaries, less prospects for advancement and the like, at local government level.

CONCLUSION
Fiscal federalism is relevant for all kinds of government – whether the government is unified as in the French model or decentralised as in the American model. The constitutional right of citizens to move and settle anywhere within the borders of their country should never be compromised. Tribalists and opportunists should never be allowed to usurp the noble concept of devolution and use it to form the basis for tribal politics which intend to take Zimbabwe and Zimbabweans two hundred years back.

Mpumelelo Ndlovu
hlosukwakha@gmail.com
(South Africa)

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