Equalization

The equalization can indicate two close concepts:

  • financing of the overdrawn activities of a company or an administration by the receipts perceived near other customers or users.
  • systems of transfers of taxes between the federate entities of a Federal state.

Tariff equalization

Case of the public sector

It is a mechanism of Redistribution which aims at reducing the variations of richness and the inequalities, but with the detriment of a transparency on the real costs what can skew the decisions.

This system is a rule of management of the Public services, it them constrained to ensure of the missions that only profitability could only encourage to give up (such as for example the service road by the SNCF small communes or the single tariff for the routing of a mail of an unspecified point of the territory with another).

The tariff equalization creates problematic situations when the public operators are confronted with a private competition itself not subjected to this equalization.

The equalization can also be a system of redistribution of the resources between several administrative entities. For example, the State instituted a redistribution system in the subsidies of operation which it allots to the communes so that smallest of them can profit from an acceptable budget.

Case of the edition

The law of equalization has a great importance in the field of the trades of the book, and in particular of the Librairie. The example of a bookstore makes it possible to better include/understand the principle of equalization: the only sale of works known as “difficult” (rotating slow) in a bookstore, concerning a restricted public, would not make it possible to ensure the profitability of the shop. One then hopes on the authors “general public” to ensure the perenniality of the company and, indirectly, to allow to propose the “difficult” works more whose sale will not be obligatorily any more immediate (thus possible…).

This process is also current in the medium of the edition. Indeed, the publication of works at strong potential of sale makes it possible to the editors to publish works whose authors did not renconté their public yet.

Case of the private sector

The equalization is opposed to tariff discrimination (principle of tariffing of the private companies) in which each one pays according to the cost of the services. It in particular was applied in France to the networks electrical supply and telephone, and is threatened by the Libéralisation of these markets, although the legislator seems to be concerned with it, as in article 10 of the European Directive of the December 19th 1996 concerning common rules for the interior market of electricity:

“the Member States can oblige the companies of distribution to supply customers located in a given zone. The tariffing of these supplies can be regulated, for example to ensure the equal treatment of the customers in question. ”

Federal equalization

Germany

In Germany the redistribution system ( Länderfinanzausgleich ) allows all the Länder to obtain similar budgetary means some is their richness. It includes/understands several types of transfers, the Federal state to the Länder and directly between the Länder . The Germans usually oppose to them kooperativer Föderalismus (co-operative federalism) with the Wettbewerbsföderalismus (competitive federalism) into force in Suisse or with the the United States.

Canada

See also: federal Equalization in Canada

The constitution of the Canada, by article 36 of the constitutional Law of 1982, aims at " to give to the provincial governments sufficient incomes to put them able to ensure the public services at a level of quality and taxation appreciably comparable." (source: http://lois.justice.gc.ca/fr/const/annex_f.html#III)

In way practices, for the financial year in 2006-2007, the federal government took a portion of the incomes generated by the provinces of the Ontario, the Colombia-British and Arberta. This money at summer redistributed with the following provinces: the Quebec, the Saskatchewan, the Manitoba, the Island of the Prince-Edouard, Newfoundland, New Brunswick, and Nova Scotia. (Source: http://www.fin.gc.ca/FEDPROV/eqpf.html)

The formula of equalization is revised every five years, to take account of the economic changes of each area.

External bonds

  • Texte of the European directive
  • an explanation of the equalization enters the government of Canada and its provinces.

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