LOCAL FISCAL SYSTEMS AND SOCIAL JUSTICE ACROSS EUROPEAN UNION COUNTRIES
LOCAL FISCAL SYSTEMS AND SOCIAL JUSTICE ACROSS EUROPEAN UNION COUNTRIES

Author(s): Lenuta Cojocariu, Arina-Emilia Gogu, Florin Oprea
Subject(s): Public Finances
Published by: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi
Keywords: direct taxation; indirect taxation; local budgets; social justice; income distribution;
Summary/Abstract: In the context of fiscal federalism, local authorities have expanded their administrative powers, being nowadays involved in the efforts of macroeconomic stabilisation or ensuring a better income distribution within society. Local budgets have become in this context important tools of influencing progress in a society at both the microeconomic and macroeconomic levels. In this paper, we analyse particularly the potential connection between local fiscal systems and social equity, measured by income distribution and Social Justice Index, on a comparative approach between two groups of countries in Europe: North-West as developed countries and South-East as developing countries. As expected, strong local fiscal systems are associated with low level of social inequity in North-West countries, while weak local fiscal systems are associated with high levels of social inequity in South-East countries, showing that significant increases of the share of indirect taxes promote equity imbalances between various social categories within a society. Based on these findings, we formulated some concluding remarks as useful recommendations for improving the structure of local fiscal systems and thus, enhancing the role of local budgets in stimulating the progress of a society.

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