Day 6: Wednesday, 20 January 2016

Decentralization pulls diverse peoples together. On the contrary, centralization only serves to push them apart.

Sao Yawd Serk, Chairman, Restoration Council of Shan State, speaking to foreign department officials in Bern, 18 January 2016

Today, we are honored by a scholar highly respected among groups working in Burma. Dr. Julian Hottinger is a 27 year veteran consultant for projects over conflicts in several countries, including Indonesia, Cambodia, Sri Lanka, Northern Ireland, Afghanistan and Sudan.

Again, there isn’t any opportunity for me to take notes of this presentation on ceasefire implementation. But I do remember two things:

• I’ve never known any treaty signed by all the groups concerned.(Because not all parties have signed, one cannot say a ceasefire has failed.One should not close the door to others in a nation-wide ceasefire.The legitimacy of the ceasefire comes with its implementation: Sitting and waiting for other signatures is not a good tactic.While time goes by, more parties will sign and therefore it is crucial not to marginalize or exclude anyone.)

• Security Sector Reform/Disarmament, Demobilization and Reintegration (SSR/DDR) can be discussed (concurrently with other topics). But agreement can come only after agreement on political issues has been concluded (not before).

At least that’s what I think he means.

At 15:00, we are in Bern again, this time to attend the presentation given by Mr. Thomas Minger, head of home affairs, on the principles of fiscal federalism.

After all these years, the only thing I know well about money is how to spend it, and maybe also saving it for the rainy day. All my life, the subject has too much been deep water for me. But perhaps this time, he manages to knock some sense into my old thick head.

Finance, according to him, is the core of federalism. The distribution of powers to different level of government will mean nothing unless it comes along with distribution of finance. Suppose Shan State is allowed to set up a self defense force, but there is no budget allocation for it, what can the Shan State government do?

He goes further to explain how the Three Guiding Principles of Swiss Federalism is being applied for fiscal matters.

The three principles are:

• Subsidiarity

Every task shall be carried out at the lowest level possible

• Fiscal equivalence

Each function of government should be financed at the level at which it is consumed, and decisions               are taken by those who pay

• Direct democracy

Elections/voting                                                                                                                                                     People’s initiatives, Referendums and Petitions

The first principle is applied in the following way:

• Regional and local problems have to be solved at the cantonal or communal level.                     National concerns meanwhile require national solutions.

• For example, internal security is managed by cantons; national security by the confederation.

A look at the following graphic will be more lucid for both the first and second principles:

One sees that:

• When it is general administration, the communes have more to spend than other levels. The same goes for culture, sport and leisure, and protection of the environment and spatial planning
• But when it comes to health and education, the cantons are spending the most
• As for national economy, finances and taxes, the top expenditures go to the confederation
• Interestingly, the confederation and cantons (collectively) are spending almost the same amount for security

More interestingly, tax sources and maximum tax rates are fixed in the constitution by applying the third principle, direct democracy. “It means if the government wants to revise the tax rates, it can only be done by changing the constitution, which in turn can only be done through referendums,” says Mr. Minger.

Which also means a citizen is required to pay his dues to all three levels of government. But how? “In Germany, all taxes are paid to the federal government, which then transfers them to the state and local governments,” he explains. “But here, you pay directly to each level through your bank.” (Well, when do you think we can do the same back home?)

Another particular we learn about the Swiss fiscal federalism is equalization of resources, which in plain language means rich cantons must share their wealth with the poorer ones.

According to the graphic, the minimum equalization is fixed at 85% since as many as 9 cantons are below it, a referendum was held to decide on it resulting in the resource index shown in the above graphic. “Richer cantons of course didn’t like it,” he reports. “But they can’t very well go against the popular decision either.”

So what is the average taxpayer getting out of it?

• Free schooling
• Security
• Infrastructure
• Culture (“You may think you still have to pay for the ticket to a cultural event. But what the event costs is much more than the fee you pay. That comes from your tax.”)
• Services
• Social Security

What about health care? We are to learn about it tomorrow.