The study examines two different questions regarding municipal fiscal equalisation (MFE) in North Rhine-Westphalia: Whether and how should municipal climate protection activities and measures to adapt to climate change be taken into account in municipal fiscal equalisation? And what effects could a multi-year reference period-related tax capacity measurement figure have in municipal financial equalisation? In addition, there is the question of which fundamental criteria speak in favour of or against such a change.
The researchers conclude that the logic of municipal fiscal equalisation does not match the logic of heterogeneous and cross-sectional municipal climate protection as a dynamically growing activity.
And how do we deal with this ‘climate change MFE dilemma’? With the climate impact approach, the researchers present an innovative, but not yet ‘turnkey’ concept for overcoming this dilemma. The instrument, which builds on greenhouse gas reductions in a results-orientated manner and at the same time enables administrative simplifications, would be a novelty for municipal climate protection and also for fiscal equalisation.
With regard to the second question, the researchers come to the conclusion that, from a financial point of view, there is no clear superiority of a one-year or multi-year assessment basis for municipal tax capacity. However, the arguments in favour of a multi-annual basis slightly outweigh those in favour of a single year.
