ABSTRACT
This chapter presents an overview of the evolution of regional finances in France. It describes the changing role of French regions by means of an analysis of the expenditure side of their budgets. The increase in capital expenditure and the shift towards more direct investment are not the only causes of the explosion in regional expenditure. Another source of increase in regional expenditure can be found in the evolution of current expenditure. Since 1977, per capita current expenditure by French regions has increased thirteen-fold in real terms. The annual rate of increase in educational investment by regions is also higher than for any other category of expenditure. As is the case for the municipalities and departments, the French Constitution does not allow the regions to set up new taxes. The explosion of regional taxes raises once again the question of the optimal degree of liberty which should be left to the regions on fiscal matters.
