Question

Provide full definition with contrast and examples and which author make great contribution to each one: Horizontal Fiscal Imbalance and Vertical Fiscal Imbalance

Answer 1

Fiscal imbalance is a mismatch in the revenue powers and expenditures responsibilities of a government .

Horizontal fiscal imbalance images when sub-national governments have different abilities to raise their funds from their tax bases and to provide services.

The example for this is Iraqi constitution it was a Sticking point for the drafting process- with the rich oil regions Seeking to minimise the reallocation of revenue while other regions sought to maximise equalization payments.

vertical fiscal imbalance occurs when the revenues of different levels of governments that is center, state and local do not match the expenditure responsibilities there is a mismatch in the revenue capacity and expenditure responsibilities of the central ,state and local government.