Fiscal Decentralization in Turkey and Differentiation in Selected Provinces

Abstract

In this study, fiscal decentralization in Turkey was first considered in terms of the size of local governments within the general government at the macro level, and then the differentiation of fiscal decentralization among the local governments on the basis of selected provinces was examined. The revenue and expenditures of local governments in Turkey have increased as a proportion of GDP, while the level of fiscal decentralization has shown a distinctive structure especially since 2000s. Results indicate that there is no efficient calculation methodology for achieving vertical equality. The objective for achieving horizontal equalization in the transfer system remains also limited. Fiscal decentralization rates differ between provinces. Intergovernmental revenue sharing system and differentiation in own source revenues mainly resulting from the income levels of the regions clearly shows that there has been an inadequate vertical and horizontal imbalances and current sharing system somehow increases inequalities among provinces.In this study, fiscal decentralization in Turkey was first considered in terms of the size of local governments within the general government at the macro level, and then the differentiation of fiscal decentralization among the local governments on the basis of selected provinces was examined. The revenue and expenditures of local governments in Turkey have increased as a proportion of GDP, while the level of fiscal decentralization has shown a distinctive structure especially since 2000s. Results indicate that there is no efficient calculation methodology for achieving vertical equality. The objective for achieving horizontal equalization in the transfer system remains also limited. Fiscal decentralization rates differ between provinces. Intergovernmental revenue sharing system and differentiation in own source revenues mainly resulting from the income levels of the regions clearly shows that there has been an inadequate vertical and horizontal imbalances and current sharing system somehow increases inequalities among provinces.