Dysfunction of Fiscal Equalization Mechanisms in the System of Local Government Finances in Poland

In: Lex localis: journal of local self-government, Volume 13, Issue 4, p. 1019-1045

Abstract

The main objective of this paper is to determine the substance of equalization systems and the causes and effects of their use in local finances, as well as the analysis of the differences of existing equalization mechanisms in selected countries. However, the specific objective is the identification of the key drawbacks and dysfunctions of the equalization system in Poland and to propose specific recommendations in the context of introducing necessary reforms. The authors of the paper present the view that firstly, actions should be undertaken to strengthen the financial autonomy of Polish local government entities, and only later, as a result, build a new equalization system adapted to the level of revenue and expenditure independence and different expenditure needs of local government in Poland.