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Questionnaire and Guidelines
on
Qualitative Decentralization Indicators
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On the following pages you will find the questionnaire itself, which is the last 3 pages. The
following 3 pages give guidelines for the questions. By looking at the existing data set you can
get some additional insight into the format in which the questions are answered. The
questionnarie and the
Expenditure Assignment
The expenditure assignment describes the authority that the different levels of government have
with respect to the governments service delivery. For each expenditure category, the data
indicates to whom the responsibility for setting amounts, determining structure, executing
spending and supervising the execution is assigned. The example below shows the case of Czech
Republic.
Expenditure Assignment in the Czech Republic
Social Services Transportation Other Services Utility Services
Primary and Preschool Education
Ports and Navigable Waterways
Drinking Water and Sewerage
Public Order and Safety
Electric Power Supply
Urban Transportation
Secondary Education
Interurban Highways
Oil and gas Pipelines
Telecommunications
Nutrition Programs
Waste Collection
Urban Highways
Social Welfare
Fire Protection
Public Health
Universities
Railroads
Hospitals
Irrigation
Housing
Airports
Heating
C: Central
Police
I: Intermediate
L: Local
Amount L C,L C C,L C,L C,L C C C L L L
Structure L C,L C C,L C,L C,L C C L L L
Execution L L C,L C C,L C,L C,L C C C,L C,L C,L L L L
Supervision L C C C C L L
Main C C
Responsibility
The following describes how you should fill in the information. For each expenditure category
(e.g. housing, nutrition programs, etc.), identify which level of government is primarily
responsible for:
Setting the amount, i.e. the total amount that the government spends on that expenditure
category.
Setting the structure, i.e. determining how the money is spent, for instance how much is
spent on salaries vs. how much is spent on investments.
The execution, i.e. who delivers the services for that category.
The supervision, i.e. who supervises the execution of the spending.
Often, it is difficult to find information at the above level of detail. In such cases you should
indicate which level of government is mainly responsible for the expenditure category in the
main responsibility box.
If in any of the entries it is impossible to identify one level of government with primary
responsible, then identify which levels share responsibility.
Revenue Assignment
The revenue assignment describes the authority that the different levels of government have with
respect to generating revenue. For each tax category, the data indicates to which level of
government is responsibility for choosing the instrument, setting the tax base, setting the tax rate
and administrating the tax. The example below shows the case of Pakistan:
Pakistan Income Property Consumption Other Taxes Charges
Business Tax
Industry and
Sates/VAT/
Electricity
Gambling
resources
Turnover
Pollution
Vehicles
Property
property
Transfer
C: Central
Natural
Payroll
Excise
Stamp
All /1
trade
Fuel
CIT
PIT
I: Intermediate
L: Local
Instrument C /3 C C C C /4 C C,L I I C
Base C /3 C C C C,I C C,L I I C
Rate C /3 C C C C,I C C,L I I C
Administration C /3 C C C C,I C C,L I I C
Shared/Piggybacked /2 S
/1 In some countries, it has been reported that the one level of government determines all the instruments, sets all the bases, all the rates or collects all taxes. In those
cases, it is reported in this column.
/2 When a percentage is reported in the Shared/Piggybacked entry, it is a shared tax and the percentage indicates the local governments' share.
/3 Other than agricultural income.
The following describes how you should fill in the information. For each revenue category (e.g.
corporate income tax, personal income tax, value added tax (VAT) etc.), identify which level of
government is primarily responsible for:
Choosing the instrument, i.e., determining which revenue categories are used.
Setting the tax base, i.e., defining exactly what will be taxed.
Setting the tax rate.
The administration, i.e., who administers the tax.
If in any of the entries it is impossible to identify one level of government with primary
responsible, then identify which levels share responsibility.
Taxes are commonly shared among levels of government; in addition, one level may
“piggyback” on another level of government’s tax. This is important information that can be
indicated in the shared/piggybacked box.
A shared tax is one in which the revenue is shared across levels of government, but the tax rate is
fixed nationwide and usually set by the central government. The lower levels of government
receive a fixed proportion of the revenue, often based on the amount collected in their
jurisdiction. If the proportion is known, it should be indicated by writing the percentage that the
local government receives in the shared/piggybacked box.
With a piggybacked tax, revenue is also shared across levels of government. The central
government generally defines the tax bases and central tax rate. Lower level governments set
their own rate and recieve the share of revenue collected in their own jurisdiction that arises from
the surcharge.
Regulatory Framework for Sub-national Borrowing
The regulatory framework for sub-national borrowing describes nature of the regulation. The
arrangements vary widely across countries, but the dataset provides some useful perspectives on
the regulation. By asking a set of questions, the key issues relating to sub-national borrowing
can be illuminated. The example below shows the case of Denmark.
Regulatory Framework for Sub-national Borrowing in Denmark
Allowed? Sub-national Institutional Numerical Constraints on the Can tax Do Regulatory Sovereign Is borrowing Other remarks
Borrowing setup for or other use of loan sharing be local/provincial framework Guarantee? approved by
Controls /1 capital constraints proceeds? used as a governments the center?
market on guarantee? own banks?
access borrowing?
Domestic Foreign
Yes Coope- Coope- No An annual Municipalities: only No No Exemptions to
rative rative restrictions, pool for for investments in the rules
market exemptions rate-financed areas. outlined are
terms. of 500mill. Counties: Only for institutionalized
Is used as a construction and used as a
fiscal investments and fiscal
instrument. maximal 25% of net instrument.
construction
investments.
The table below describes the how you should fill in the information.
Question Guidelines
Allowed? Borrowing is usually restricted, but if it is not allowed, enter no.
Otherwise yes.
Sub-national Borrowing This entry uses the categorization provided by Teresa Ter-
Controls Minassian (1997), “Fiscal Decentralization in Theory and
Practice”. The categorization is:
Market Discipline: There is no speciel regulation on sub-
national government borrowing, i.e., they are only subject to
the regulation that any borrower in the country is subject to.
Cooperative Control: Cooperation by different levels of
government in the design and implementation of debt controls.
Rule-based Control: Common rules are “the golden rule”
prohibiting borrowing for current expenditures; a ceiling on
the debt as a share of revenue; a ceiling on the debt service
ratio, and restrictions on types of lenders.
Administrative Control: Examples of administrative controls
are: central approval of sub-national borrowing, limits on
borrowing for each jurisdiction
Borrowing Prohibited: Borrowing is not allowed.
Please identify the category that most appropriately describes the
borrowing control in the country for domestic as well as for
foreign borrowing.
Institutional setup for There is no categorization for this question, and experience varies
capital market access widely. Examples are commercial banks, the central government,
indirectly through a central entity controlled by the central
government, and municipal bonds.
Numerical or other Often local borrowing is limited by a ceiling on the debt as a share
constraints on borrowing? of revenue a ceiling on the debt service ratio, or similar
arrangements. Describe the constraints.
Constraints on the use of Often loan proceeds can only be used for capital expenditures, and
loan proceeds? sometimes they are limited to certain sectors. Describe the
constraints.
Can tax sharing be used Can revenue from shared taxes be used as a guarantee for
as a guarantee? repayment of sub-national debt?
Do local/provincial For instance in Brazil, the state government used the state
governments own banks? controlled banks to borrow excessively. Does the country have a
similar opportunity?
Regulatory framework A very general description of the regulatory framework, for
instance governed by which law, or regulated by which entity.
Sovereign Guarantee? Does the central government guarantee sub-national government
debt? – It can be yes/no/sometimes. If sometimes, describe when.
Is borrowing approved by Does the central government approve sub-national government
the center? debt? – It can be yes/no/sometimes. If sometimes, describe when.
Other remarks Any other relevant comments
Characteristics of the Intergovernmental Transfer System
Most sub-national governments rely partially on funding via intergovernmental transfers, and the
design of the transfer system is critical for successful decentralization. The transfer system is the
most complicated part to describe, since it is usually comprised by a number of very different
programs, and each of these programs are therefore described separately. The data describes in
detail how the divisible pool, i.e. the total amount spent, is calculated and how the funds are
distributed.
The example below shows Colombia.
The table below describes the how you should fill in the information. Since intergovernmental
transfer systems are usually comprised by a number of programs, this description is broken down
by transfer program. Thus, the following questions must be answered for each program.
Question Guidelines
Name of the program For example in Chile, “National Fund for Regional
Development”
Transfer or Shared Tax Is it a shared tax or a transfer? –A tax is shared when the sub-
national governments receive a fixed share of the amount arising
from their jurisdiction. Otherwise it is a transfer.
On the divisible pool The divisible pool is the aggregate amount distributed by this
transfer program.
Discretionary or automatic Is the divisible pool determined by discretion of the government,
or is it determined by a set of define rules?
Total amount (local Amount spent under the program
currency) in millions
Year The year of the above amount.
Amount/sub-national
expenditures
How is it determined? How is the divisible pool determined? – If it is automatic, then
describe the rules it is determined by. If it is discretionary, then
describe who makes the decision and how.
On the distribution
Discretionary or automatic Is the distribution determined by discretion of the government, or
is it determined by a set of define rules?
For Current or Capital Are the funds used for current or for capital expenditures or
both?
Sectoral allocation Which sectors the transfer?
Matching? Do the transfers require sub-national governments to contribute
by a set percentage?
Who receives? For instance, municipalities, states, or provincial government.
How are transfers How is the distribution determined? – If it is automatic, then
distributed? describe the rules it is determined by. If it is discretionary, then
describe who makes the decision and how.
Other remarks Any other relevant comments
Pollution
Charges
Telecommunications
Utility Services
Electricity
Electric Power Supply
Waste Collection
Natural
Drinking Water and Sewerage resources
Stamp
Other Taxes
Fire Protection Gambling
Heating
Other Services
Vehicles
Irrigation
Police Industry and
trade
Public Order and Safety
Fuel
Oil and gas Pipelines Consumption
Excise
Urban Transportation
Sates/VAT/
Railroads Turnover
Transportation
Airports
Transfer
Property
Ports and Navigable Waterways property
Urban Highways Property
Interurban Highways
Payroll
Social Welfare PIT
Income
Hospitals
Business Tax
Expenditure Assignment
Public Health
Social Services
Universities CIT
Revenue Assignment
Secondary Education All /1
Primary and Preschool Education
Nutrition Programs
Housing
Shared/Piggybacked
I: Intermediate
I: Intermediate
Administration
Responsibility
C: Central
Supervision
LEGEND:
C: Central
LEGEND:
L: Local
Instrument
Execution
L: Local
Structure
Amount
Main
Base
Rate
Regulatory Framework for Sub-national Borrowing
Allowed?
Sub-national Borrowing
Controls
Institutional setup for
capital market access
Numerical or other
constraints on borrowing?
Constraints on the use of
loan proceeds?
Can tax sharing be used
as a guarantee?
Do local/provincial
governments own banks?
Regulatory framework
Sovereign Guarantee?
Is borrowing approved by
the center?
Other remarks
Characteristics of the Transfer System
Since the transfer systems are usually comprised by a number of programs, this description is
broken down by transfer program. Thus, the following questions must be answered for each
program.
Question
Name of the program
Transfer or Shared Tax
On the divisible pool
Discretionary or automatic
Total amount (local
currency) in millions
Year
Amount/sub-national
expenditures
How is it determined?
On the distribution
Discretionary or automatic
For Current or Capital
Sectoral allocation
Matching?
Who receives?
How are transfers
distributed?
Other remarks
