IREF - Institute for Research in Economic and Fiscal issues
Fiscal competition and economic freedom
Abstract: The Scandinavian countries of Denmark, Norway, and Sweden are similar in many respects, not least with regards to the basic administrative set-up: a non-federal task-related division between state, counties and municipalities. In all three countries, counties and municipalities raise a large share of their own revenue, which is then supplemented by government grants. In addition, central government redistributes large amounts of locally collected revenue between the municipalities and the counties respectively, severely hampering local budgetary autonomy.
Tax matters are generally centralised, although local governments to a varying degree play a role in the collection of taxes as well as in the setting of local tax rates (usually on personal income and property). In Denmark, Norway, and Sweden alike, the administrative set-up has not been able to prevent a massive increase in local public expenditure in the latter part of the 20th century.