Rules for fiscal equalisation to mitigate disparities among local governments

The legislation stipulates horizontal or vertical fiscal equalisation mechanisms

Review of legislation to check whether the law stipulates fiscal equalisation to mitigate disparities and show solidarity across local governments. Due to local disparities the legislation should consider equalisation mechanisms, either vertical or horizontal, or both, to help balance the economic difference among local governments. The criterion is fulfilled if there are rules regulating vertical equalisation and/or horizontal equalisation of local governments, which are based on objective measures that do not provide disincentives to local governments

Intergovernmental transfer system leads to mitigation of disparities in financial potential of local governments

Review of own source and total revenue execution data for individual local governments to check to what extent the intergovernmental transfer system leads to reduction of disparities between more and less affluent local governments. Points are allocated as follows: Changes in the total revenue capital before and after equalisation: - x < if the 9th to 1st decile proportion is more than 3 = 0 points - 9th to 1st decile proportion is 3 ≤ x < 1.5 = linear function - x ≥ if the 9th to 1st decile proportion is below 1.5 = 6 points.