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Scenarios for the funding of subnational governments

COUR DES COMPTES

At the request of the Senate Finance Committee, the Court of Accounts has initiated a reflection on scenarios for the funding of local governments. This investigation comes at a time when the
abolition of the housing tax on main residences and the reduction in production taxes have
profoundly altered the revenue mix of all levels of subnational governments, with growth in the
share of national taxes shared with the central government. While a new public finance
programming bill will have to draw up a public finance trajectory including local government
finances from 2023 onwards, a reflection on the possible changes in the methods of funding local governments – regions, departments, municipalities and their groupings – appears necessary. The report published today underlines the historical sedimentation of these revenues and makes the observation, shared by many stakeholders, of a complex, exhausted system. After presenting the scenarios for the evolution of local government funding, it identifies the conditions for a reform involving renewed governance and a new pact of trust between the central government and local governments.

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