Equity and grants to local governments

In most countries with political subdivisions, grants from central to local governments are an important part of the fiscal scene. In the United Kingdom, about half of all local government spending is financed through grants from the central government. In the United States, about 30 per cent of state and 45 per cent of local revenues come from higher level governments. In Australia the equivalent figures are 60 per cent for state and 25 per cent for local; in West Germany they are 20 per cent for the Lander and 45 per cent for local government.1