Data collection template and questionnaire

Compulsory redistribution of surpluses: Percentage of average fiscal capacity Redistribution 100 – 101 % 15 % 101 – 110 % 66 % > 110 % 80 % [Scale of redistribution under the specific equalisation scheme in 2001: About 15 billion DM. More than ¾ were assigned to Berlin and the eastern Länder.] 4. Stage: Vertical financial Equalisation / Supplementary federal grants (“Bundesergänzungszuweisungen” or „Bund-Länder-Finanzausgleich“) “Gap-filling grants” (Fehlbedarfsbundesergänzungszuweisungen): Guarantee the poor Länder the lifting up of their financial power to at least 99, 5 % of average financial capacity of all Länder Compensations for special burdens (Sonderbedarfsbundesergänzungszuweisungen) to relieve small Länder of the costs of “political management” and new Länder of special costs arising from unification (teilungsbedingte Sonderkosten) as well as Bremen and Hamburg for budgetary crisis (high public depths) Transitional grants (Übergangsbundesergänzungszuweisungen) for the poorer west German Länder since 1995. Designed degressively (minus 10% per year). Widely used after unification, previously insignificant. [Scale of redistribution under the supplementary federal grants in 2001: About 24,7 Billion DM.]

Total yield of redistribution under the federal equalisation scheme in 2001⁶³⁰

Purpose	Total yield, in Billion DM
Distribution of turnover tax, deviating from apportionment by population	+/-	15,3
Specific horizontal equalisation scheme	+/-	14,8
“German Unification Fund”		5,0
Supplementary federal grants	+	24,7
Federal equalisation scheme total about		59,8

Results of specific horizontal equalisation scheme ( stage 3), in Billion DM

(Positive: received; negative: paid)

	1990	1994	1995	1999	2000	2001	Trend since 1995
Hessen	-1,4	-1,8	-2,2	-4,7	-5,4	-5,1	-
Baden-Württemberg	-2,5	-0,4	-2,8	-3,4	-3,9	-4,2	-
Bayern	0	-0,7	-2,5	-3,2	-3,7	-4,5	-
Nordrhein- Westfalen	-0,1	0,2	-3,4	-2,6	-2,2	-0,5	o
Hamburg	0	0,1	-0,1	-0,7	-1,1	-0,5	o
Schleswig- Holstein	0,6	0,1	-0,1	0,2	0,4	0,1	o
Saarland	0,4	0,4	0,2	0,3	0,3	0,3	o
Rheinland-Pfalz	0,5	0,7	0,2	0,4	0,8	0,4	o
Bremen	0,6	0,6	0,6	0,7	0,9	0,8	+
Mecklenburg- Vorpommern	-	0,0	0,8	0,9	1,0	0,8	+
Niedersachsen	1,9	1,0	0,5	1,0	1,1	1,9	+
Brandenburg	-	0,0	0,9	1,1	1,3	1,0	+
Thüringen	-	0,1	1,0	1,2	1,3	1,1	+
Sachsen-Anhalt	-	0,1	1,1	1,3	1,4	1,2	+
Sachsen	-	-0,1	1,8	2,1	2,3	2,0	+
Berlin	-	-	4,2	5,3	5,5	5,2	+
Total yield of balancing	4,0	2,9	11,2	14,6	16,3	14,8	+

IV. Recent developments⁶³¹

In its November 1999 ruling the German constitutional court (Bundesverfassungsgericht) asked the government to revise the German financial equalisation system (BverfG, 2 BvF 2/98 vom 11.11.1999, Absatz-Nr. (1-347)).

On the legal proceedings brought to ask for judicial review to the constitutional court by Baden-Württemberg, Bayern, and Hessen the Bundesverfassungsgericht decided that parts of the law on financial equalisation were not in compliance with § 107 of the German Constitution (Grundgesetz). The appealing Länder Baden-Württemberg, Bayern, and Hessen stated among others, that the integration of the ‘new’ Länder constituted a fundamental change of the law on the financial equalisation system and that thus a new law had to be drafted instead of the amendment of the old law in 1993 and 1998. Furthermore the law on financial equalisation would partly be not in compliance with the Grundgesetz, especially concerning the German Unification Fund (‘Fonds Deutsche Einheit’). Old and financially weaker Länder due to the chosen amendments over proportionally suffered from the extension of the system on the new Länder. Moreover, the consideration of harbour charges (Hafenlasten) and the special treatment of the city states (their population is taken into account with the factor 1,35) would need revision. Facts, which Bremen, Niedersachsen and Schleswig-Holstein still underlined as necessary to be considered within the future financial equalisation scheme.
The government, according to the ruling, was asked to adopt the new financial equalisation system until 1^st January 2005. Until 1^st January 2003 the government in a two-step procedure had to adopt a law on budgetary principles (the so called Maßstäbegesetz) with clear principles of distribution. Based onthis law the new financial equalisation system should be adopted until 2005.

Also until 2005 a follow-up regulation (Solidarpakt II) has to be adopted for the terminating Solidarpakt with the new Länder, which has to be closely interlinked with the new financial equalisation system.

In February 2001 the German federal government adopted its draft new Maßstäbegesetz. The draft presents the principles for the vertical and horizontal distribution of turnover tax, the horizontal financial equalisation scheme (Länderfinanzausgleich) and the supplementary federal grants (Bundesergänzungszuweisungen). The draft thus laid down abstract principles for the concrete distribution and equalisation, which will be laid down in the new law on the financial equalisation system.

On 23^rd June 2001 the Federal government and the Länder agreed the new financial equalisation system (in power from 2005 to 2020) and the Solidarpakt II scheme (in power from 2005 to 2020; financial volume: ca. 156 billion €). Key elements of the new financial equalisation system are:

• 
  The Federal level will take over the German Unification Fund (‘Fonds Deutsche Einheit’: comprises 25,5 billion € remaining debts (Altschulden) of the Länder)
  
  • 
    From 2020 on the Federal level will take over the remaining debts of then about 6,5 billion €
    
• 
  The federal level will pay ca. 0,77 billion € to guarantee a fair financial equalisation among the Länder
  
• 
  Financially stronger Länder will be allowed to keep more over their tax revenue surplus (Steuermehreinnahmen) than before (now: 12%)
  

The Solidarpakt II includes:

• 
  Ca. 156 billion € transfer to the Eastern Länder
  
  • 
    Ca. 105 billion € due to the investment support measures act (Investitionsfördergesetz) and supplementary federal grants (Bundesergänzungszuweisungen)
    
  • 
    Ca. 51 billion € due to the general economy support measures of the Federal budget
    

Equalisation Payments * ^632      Supplementary federal grants Länder receiving equalisation payments Länder making equalisation payments 2000 2001 2000 2001 2000 2001 Mio € Volume of equalisation payments 13 339 12 637 8 273 7 588 8 273 7 587 Baden-Württemberg - - - - 1 957 2 132 Bavaria - - - - 1 884 2 298 Brandenburg 1 375 1 358 644 500 - - Hesse - - - - 2 734 2 622 Mecklenburg-Western Pomerania 1 030 1 017 500 436 - - Lower Saxony 970 899 568 954 - - North Rhine-Westphalia - - - - 1 141 269 Rhineland-Palatinate 658 550 392 231 - - Saarland 750 612 167 146 - - Saxony 2 345 2 313 1 182 1 036 - - Saxony-Anhalt 1 493 1 473 711 595 - - Schleswig-Holstein 406 219 185 59 - - Thuringia 1 370 1 352 670 575 - - Berlin 1 955 1 925 2 812 2 654 - - Bremen 987 870 442 402 - - Hamburg - - - - 556 266 * Preliminary results.

(“Länderfinanzausgleich”): Specific horizontal equalization scheme (SHES), (“Bundesergänzungszuweisungen”): Supplementary federal grants (SFG)

Baden-Württemberg⁶³³

BW	Fiscal resources before SHES (in Mio. DM)	Divergence from national average (balance measurement) (= 100)	Contribution / assignment within SHES (in Mio. DM)	Fiscal resources after SHES (in Mio. DM)	Divergence from national average (balance measurement) (= 100)	Supplementary federal grants (in Mio. DM)						Fiscal resources after SHES and Gap-filling grants (in Mio. DM)	Divergence from national average (balance measurement) (= 100)
						Gap-filling grants	Compensations for special political costs	Compensations for special burdens (east Germany)	Transitional grants (west Germany)	Rehabilitational grants Bremen and Saarland	SFH total
1995	46.016	109.7	-2.803	43.212	103.0	0	0	0	0	0	0	43.212	103.0
1996	46.432	108.8	-2.521	43.911	102.9	0	0	0	0	0	0	43.911	102.9
1997	46.211	108.7	-2.410	43.801	103.0	0	0	0	0	0	0	43.801	103.0
1998	49.879	111.3	-3.477	46.402	103.5	0	0	0	0	0	0	46.402	103.5
1999*	52.398	111.0	-3.426	48.972	103.7	0	0	0	0	0	0	48.972	103.7
2000*	54.453	112.0	-3.873	50.581	104.0	0	0	0	0	0	0	50.581	104.0
2001	51.958	113.3	-4.170	47.787	104.2	0	0	0	0	0	0	47.787	104.2

*) preliminary