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Levelling the Gradients—Planning for Equivalent Standards of Living, The German Experience

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Decentralisation and Regional Development

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Abstract

Germany enjoys relatively even standards of living throughout most of its territory; yet levelling the existing gradients between the federal states and between urban and rural areas is a key issue in national development and regional planning even codified in the German Basic Law. In the post-war period, the postulate was primarily applied to the development of rural areas. With the intensification of the German division the focus was extended to the area adjacent to the Soviet Zone, which suffered from de-industrialisation and out-migration. After re-unification regional inequalities between the western and eastern states and within Eastern Germany became a key issue of national concern. Today demographic change, especially ageing, and outmigration from rural regions of Eastern Germany and gradually also from the more remote parts in the West, is increasingly considered a very serious challenge to the principle of safeguarding regional equality and providing equivalent standards in the provision of public services. Three national financial policy schemes are in place to reduce regional inequalities between the federal states. The Federal Financial Equalisation Scheme was designed as a constituent part of the federal system to provide each state with adequate financial resources. The Solidarity Surcharge has been levied since 1991 in order to reduce inequalities between the western and eastern federal states. The Solidarity Pact was instituted in 1993 and re-launched in 2005 to fund reconstruction in the eastern states directly. In Germany spatial planning for equivalent standards of living is backed by a well-developed system of central places which is supported by all state planning acts. Especially in rural areas it is being complemented by non-statutory planning approaches which support private participation (e.g. neighbourhood or communal shops), inter-municipal regional cooperation (e.g. based on target agreements), and flexibilisation (e.g. multiple use of service facilities). The federal government is supporting these non-statutory planning approaches for the provision of essential public services within its urban development promotion programme with the aim of mobilising regional potentials.

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Notes

  1. 1.

    On recent debates on cohesion and spatial planning see Kunzmann (2014).

  2. 2.

    “The Constitution jointly allocates several particularly important taxes to the Federation, Länder and, to a degree, the municipalities. According to the Constitution, either the Federation, the Länder or the municipalities are entitled to the remaining types of tax in full. Income tax, corporation tax and VAT are divided between the Federation and the Länder as a whole. The municipalities are entitled to a share of the income tax and VAT. These taxes are therefore referred to as joint taxes. The Federation receives 42.5 % of the income tax, 50 % of the corporation tax and 2014 around 53 % of VAT. The revenue accruing to the Länder is 42.5 % of the income tax, 50 % of the corporation tax and 2014 around 45 % of VAT. 15 % of the income tax and, in 2014, around 2 % of VAT go to the municipalities. Of all the types of tax, income tax and VAT generate by far the most revenue. The Federation receives all of the revenue from the federal taxes. The majority of the excise duties (such as energy duty and tobacco duty) as well as the insurance tax are federal taxes. The Länder are entitled to receive all of the revenue from Länder taxes. These include the inheritance tax, most types of transactions taxes (in particular, the real property transfer tax) as well as some other types of taxes that generate small amounts of revenue. The municipalities receive the revenue from the trade tax, the real property tax as well as the local excise taxes. The Federation and the Länder receive a share of the trade tax receipts through an apportionment” (ibid.: 2).

  3. 3.

    “This assumption is not appropriate in the case of the Länder of Berlin, Bremen and Hamburg, which are city-states. The city-states are simultaneously both municipalities and Länder in their own right. They have a much higher financial requirement per inhabitant than the normal Länder. Therefore, for the purposes of the equalisation system, their populations are notionally increased by 35 %. The three sparsely populated Länder of Brandenburg, Mecklenburg-Western Pomerania and Saxony-Anhalt also have a slightly higher financial requirement per inhabitant. Their populations are therefore slightly notionally increased for the purposes of the financial equalisation” (ibid.: 4).

  4. 4.

    Source: footnote 21: 4.

  5. 5.

    Example: Income tax 5000 €. Solidarity surcharge 275 € (5.5 % of 5000 €) (cf. ibid.).

  6. 6.

    This programme (Aufbau Ost) encompasses all activities undertaken to rebuild the economy in East Germany. The volume of financial transfers is estimated to about 100 billion Euros per year (cf. Heilemann and Rappen 2015).

  7. 7.

    The Federal Spatial Planning Act places a duty on the federal state governments to consult on fundamental issues relating to federal and state spatial planning. The Conference of Ministers for Spatial Planning, which brings together the competent federal and state ministers was set up in 1967 specifically for this purpose. Although the decisions taken by the conference have no binding effect, they have nonetheless made a major contribution to establishing consensus on the aims and purposes of spatial planning in Germany (cf. ARL 2014b).

  8. 8.

    The term “Daseinsvorsorge” refers to “governmental provision of essential social, cultural, and economic goods and services for the population. This includes public infrastructural facilities for the general public—traffic and transport facilities, gas, water and electricity supply, refuse collection, sewage disposal, educational and cultural institutions, hospitals, cemeteries, etc. Public service provision in this sense is among the most important functions local authorities perform on their own responsibility” (cf. ARL 2014c).

  9. 9.

    The text of this section is largely based on this source.

  10. 10.

    The Post Bank is exempted from these regulations under the assumption that the banking sector is subjected to functioning competition (ibid.: 34).

  11. 11.

    For an overview on Finland, Great Britain, France, The Netherlands, Austria and Switzerland see BMVBS 2013.

  12. 12.

    cf. BMVBS 2013.

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Correspondence to Volker Kreibich .

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Kreibich, V. (2016). Levelling the Gradients—Planning for Equivalent Standards of Living, The German Experience. In: Dick, E., Gaesing, K., Inkoom, D., Kausel, T. (eds) Decentralisation and Regional Development. Springer Geography. Springer, Cham. https://doi.org/10.1007/978-3-319-29367-7_3

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