Along with the competence of Municipalities to administrate tasks of local importance comes the responsibility to finance these tasks of communal administration. This can be regulated in different ways, as will be shown by this elaboration.
Table of Contents
A. Introduction
B. Germany
I. Constitutional Foundations
II. Revenues and Tax Law
1. Communal Dues
a) Legal Basis
b) Types of Communal Dues
aa) Taxes
bb) Charges
cc) Shares
2. The Rules of Precedence
a) Particular Covering Resources
aa) Miscellaneous Revenues
bb) Charges for Efficiency
b) General Covering Resources
c) Loans
3. A Practical Problem: Cross Border Leasing
III. Budget Law
1. Constitutional Provisions
a) Personal Responsibility in Terms of Money
b) The Burden to Provide Financing
aa) The Relationship between the Federation and the Federal States
bb) The Relationship between the Federation/Federal States and the Communes
(1) Principle of Connection
(2) Communal Tasks Delegated by the Federal States
(3) Communal Tasks Delegated by the Federation
2. Provisions in Communal Laws
a) Budgetary Principles
b) The Annual Budgetary By-law
aa) The Annual Budget
bb) Extracurricular Expenditures
cc) Commitment Authorisation
C. Austria
I. General Principles and Key Data
II. Financial Agreements over several years
III. Dialogue between Local Authorities, Federal States and Federal Government
IV. Tax Sharing Criteria
V. Charges and their Political Aspects
VI. Special Financial Funds
VII. Advantages of joint Federal Taxes
VIII.Cost-bearing Provisions
IX. Consulting Mechanisms in the Sphere of Delegated Authority
Objectives and Core Themes
This report aims to analyze the legal and financial frameworks governing municipal authorities in Germany and Austria, specifically examining how they fulfill their local administrative responsibilities and manage their budgets.
- Constitutional foundations of local self-administration and municipal finance.
- Taxation, communal dues, and the regulatory rules of precedence for revenue generation.
- Mechanisms for delegation of tasks and the associated financial burdens.
- Budgetary planning principles and legal requirements for municipal financial management.
- Comparison of fiscal stabilization and financial cooperation between government levels in Austria.
Excerpt from the Book
3. A Practical Problem: Cross Border Leasing
It is not uncommon that Municipalities are out of money. Hence, it is not surprising that they are very creative in finding new sources of income, e. g. the so-called Cross Border Leasing. The arrangers of Cross Border Leasing are banks, industrial enterprises and insurance companies and as the case may be their subsidiaries. Among others, their job is to realise worldwide tax reductive finance assets for their parent companies. As credit grantors and debts receiver more banks, in particular Federal State banks subject to public law, come up to the arrangers. Community facilities are leased to a so-called "US Investor" to America for 99 years. US-Law takes effect. Because of the long duration of the contracts, they are classified as transfer of ownership in some Federal States of the United States. This way the "US Investor" becomes owner of the complex, and at the same time the particular commune (allegedly) remains owner as well. In a parallel contract the Commune rents back the respective complex.
By means of an option to buy the complex back, the Commune has the possibility to end the contract after 30 years. In the USA the ”Investor” declares the value of the purchased complex as expenditure and receives a reimbursement of tax from the US revenue office. The Commune directly obtains a certain amount of these benefits and binds itself to run the facility in the appointed capacity. In case the complex falls out or is not working to capacity, the ”Investor” can quit the contract and claim for damages.
It is questionable whether the communal politicians who sign off on these leasing deals are aware of what they get involved with. After all, the contracts are based on American Law. These deals of Cross Border Leasing are therefore not as comprehensibly as any local council may think and thus hide a lot of risks.
Summary of Chapters
A. Introduction: Briefly outlines the fundamental responsibility of municipalities to finance their administrative tasks and introduces the scope of the study.
B. Germany: Details the constitutional and legal framework of German communal finance, including tax law, budgetary principles, and specific fiscal arrangements.
C. Austria: Describes the Austrian system of municipal finance, focusing on fiscal stability, tax sharing, and the cooperative dialogue between different levels of government.
Keywords
Municipal Authorities, Local Self-Government, Communal Budget Law, Financial Constitution, Taxation, Fiscal Equalization, Cross Border Leasing, Administrative Tasks, Federal States, Local Revenue, Budgetary Principles, Delegated Authority, Public Finance, Germany, Austria.
Frequently Asked Questions
What is the primary focus of this document?
This work examines the financial and legal structures that enable municipal authorities in Germany and Austria to fund their local tasks, focusing on constitutional rights, revenue sources, and budgetary management.
What are the central themes discussed in the text?
Key themes include the constitutional right to local self-administration, the methods by which municipalities generate income, the challenges of delegated tasks, and the mechanisms used to balance communal budgets.
What is the main research objective?
The goal is to analyze how local self-government is organized in relation to fiscal responsibility and to describe how different types of legal acts determine the payable obligations of municipal authorities.
Which scientific methodology is applied?
The author employs a legal-analytical approach, examining statutory provisions, constitutional articles, and legal commentaries from both German and Austrian jurisdictions to explain the framework of communal public finance.
What topics are covered in the main section?
The main section covers the German constitutional foundations, types of communal dues, the rule of precedence in municipal revenue, budget laws, and a comparative analysis of the Austrian financial system, including financial equalization and consulting mechanisms.
How would you describe this work using keywords?
The work can be characterized by terms such as local self-government, public finance, fiscal law, constitutional foundations, municipal budgets, and task delegation.
How does the "rule of precedence" affect municipal revenue in Germany?
The rule of precedence dictates that municipalities must utilize specific revenue streams, such as miscellaneous revenues and charges, before resorting to other forms of funding or loans, as mandated by local government codes like the BayGO.
What risks are associated with "Cross Border Leasing" for municipalities?
Cross Border Leasing deals involve complex, long-term contracts governed by foreign (US) law, which can hide significant legal and financial risks for municipalities if the terms are not fully understood by the participating local politicians.
How does the Austrian system ensure financial stability for local authorities?
Austria employs a long-term financial equalization framework and a "consulting mechanism" between federal and local governments to prevent unnecessary financial stress and ensure that adequate funding is provided when new tasks are delegated.
Is the principle of connection applied similarly in Germany and Austria?
No, while the principle of connection (Konnexitätsprinzip)—which requires funding to accompany new tasks—is introduced in some German Federal State constitutions, it does not apply in Austria, where the focus is on efficient execution by the authority entrusted with the task.
- Arbeit zitieren
- Wolfgang Tiede (Autor:in), 2007, Structure of Legal Acts which Determine the Payable Obligations of Municipal Authorities in European Countries, München, GRIN Verlag, https://www.hausarbeiten.de/document/169722
