The aim of this paper is to assess the financing system for the local government in Poland from the perspective of the origin of fiscal illusions. The notion of fiscal illusions rarely appears explicitly in the literature in the context of decentralization as it is mostly analysed in the context of taxation problems. In the financing system of the local government units, it is most frequently associated with the paradox of the flypaper effect. However, the phenomenon is gaining more economic, political and social importance due to the politicization and the ongoing decentralization of public finance. The share of transfer revenues such as the general purpose grant, earmarked grants and shares in PIT and CIT in the system of local government finance is on the increase. On the basis of a positive analysis, the main sources of fiscal illusions resulting from the present system of financing local government in Poland have been identified.
Decentralization, fiscal illusions, local government finance, public finance.
The author is with the Department of Public Finance, University of Lodz, Rewolucji 1905 r. 39 st., 90-214 Lodz, Poland (e-mail: email@example.com).
Beata Guziejewska, "
Theoretical Dimensions of Fiscal Illusions in Local Government Finance," Journal of Economics, Business and Management vol. 4, no. 3, pp.