ABSTRACT
This chapter explores the political economy of major changes in the Swiss Fiscal federal-cantonal relations that have been introduced since 2000. Four domains of reform are explored. First, since 2000 the base of direct taxation and the tax rules have been harmonized into two federal laws for the Confederation and for the cantons and communes. Second, rules of balance budget and debt brakes were introduced in 2003 at the federal level, and reinforced in most cantonsand contrary to the European situation with the Maastricht criteria, the rules must and are respected. Third, a large-scale reassignment of functions between the center and the cantons was started in 2008, with the attribution of exclusive competences to the federal or the cantonal level, and the precise description of responsibilities in shared functions. Finally, the equalization system with the separation of revenue equalization, based on Representative Tax System (RTS), from the expenditure needs equalization, which contains specific criteria for urban cantons and the mountain regions.
