PSI research paper explores options for sustainable and fair local and regional government funding

3 April, 2017

PSI has just published a research briefing note that reviews options for local and regional governments (LRGs) to sustainably and progressively fund quality public services for local communities and tackle the challenges posed by rapid urbanization and increasing demands placed upon LRGs  in a context of shrinking resources, corporate tax avoidance and rising city and territory-based tax competition. The brief summarizes the related discussion paper, which is open for comments and contributions till the end of May 2017.

Local and regional governments are increasingly asked to do more with less resources. They are at the forefront of territorial and urban policies and local economic development. They are in charge of the implementation on the ground of global frameworks such as the Sendai Protocol on Disaster Preparedness, the Decent Work Agenda, the Paris Agreement on Climate Change, the Sustainable Development Goals (SDGs), and now the New Urban Agenda.

Yet, when it comes to accessing the resources to do so, austerity measures, tax avoidance, international loan conditionality, international trade and tax deals, and shrinking intergovernmental transfers increasingly strip them of the essential resources they need to finance and provide access to essential public services to urban dwellers and local communities.

How to square this circle? How can local and regional governments and their workers deliver much needed quality local public services under such constraints? Much of the discussion that led to the New Urban Agenda, the UN policy guidance for urban policy for the next 20 years has concentrated around inter-municipal tax competition, PPPs, city-based benchmarking for borrowing resources in the stock market and user-fee charges.

PSI does not believe these are viable solutions that work for people, are socially just and conducive of decent employment and inclusion for all. This is why PSI consistently advocated all along for tax justice for local governments and communities as well as for progressive municipal fiscal systems. PSI affiliates such as CUPE and the ASU have already picked up this issue and are active in developing policy for progressive municipal finance LRG/municipal unions can promote and use.

This research briefing note builds on these efforts and provides a set of political and practical options, recommendations and caveats for LRG/municipal unions and their members to make counterproposals and put alternative, progressive options on the table when they are told private financing, externalisation and austerity measures are the only way to finance local public services, including within the implementation of the New Urban Agenda. It is also meant to spur much needed debate which PSILRG/municipal unions members have a lot of expertise to contribute to.

We encourage PSI affiliates to contribute to the debate and email their comments on this Research Briefing Note to Jerik Cruz at jpdcruz@ateneo.edu and Daria Cibrario, PSI Local and Regional Government Officer, daria.cibrario@world-psi.org

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