Distributional Effects of Open-Ended Matching Grants

E Jonsson
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E Jonsson: Institute of Local Government Finance, University of Stockholm, Bergsliden 6, S-16240 Vällingby, Sweden

Environment and Planning C, 1989, vol. 7, issue 1, 93-96

Abstract: An equalisation grant is intended to even out the differences in cost and income that occur between different local governments, and which are not due to differences in the scope of the services provided. Open-ended matching grants counteract this intention. Such grants provide local authorities with the opportunity of offering a higher level of service without imposing a correspondingly higher rate of tax. It is mainly authorities with a high-tax capacity that have the financial ability to take advantage of this opportunity. Open-ended grants neutralise in this way the income distributive effects of the tax equalisation grant. An evaluation of Swedish data confirms that this is indeed the case.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envirc:v:7:y:1989:i:1:p:93-96

DOI: 10.1068/c070093

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