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3 unusual facts about Fiscal imbalance


Constitutional basis of taxation in Australia

Although the text of the Australian Constitution allows both States and the Commonwealth to raise revenue, subsequent constitutional interpretation and political developments have limited state taxing powers and led to a vertical fiscal imbalance.

Section 96 of the Constitution of Australia

The vertical fiscal imbalance, alongside section 96 of the Australian Constitution has effectively extended the Commonwealth's powers beyond those enumerated in section 51 of the Australian Constitution and other explicit enumerations of Commonwealth legislative power (e.g. Section 52 and Section 90).

However, in Australia, a vertical fiscal imbalance is present, meaning that the Commonwealth has significantly greater income than the states.


Early 2000s recession

Many provincial governments suffered greater problems with a number of them returning to deficits, which was blamed on the fiscal imbalance.


see also