Direct democracy and public finances. An attempt at reconciliation
| Autor | Katia Blairon |
| Cargo | Senior Lecturer in Public Law, Université de Lorraine, France. katia.blairon@univ-lorraine.fr. This version of the paper was also published in the Revue Française de Finances Publiques, n°132, November 2015, p. 163-179. |
| Páginas | 55-71 |
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Katia Blairon1
Recebido em 10.11.2015
Aprovado em 19.2.2016
Abstract: The article faces two issue, the direct democracy and the budget, in order of discussing how political regimes build their finances, since the premise that finances and taxation determine the health of a democratic regime.
Resumo: O artigo lida com dois temas, o da democracia direta e o orçamentário, para discutir como os regimes políticos constroem suas finanças, partindo da premissa de que estas e a imposição tributária determinam a saúde de uma democracia.
Keywords: Democracy; Direct democracy; Public finances; Participative budget.
Palavras-chave: Democracia; Democracia direta; Finanças públicas; Orçamento participativo.
Direct democracy and budget are never associated. Citizens had yet never been asked to intervene, at least in basic economic, budgetary and financial national matters. The experience of the participative budget of Porto Alegre has most certainly gradually spread worldwide, but it has remained confined to the local level. Parliamentarism, together with the representative modern system, has come forward by its power to decide tax issues and discuss their use2.
Representation has quickly found shape in the level of acceptance from the tax-payers. However, if we recall one of the first texts thereof, two sides of budgetary authorization were established: “All citizens have a right to assess, either personally or by their representatives, the necessity of public contribution, to grant it freely, to follow its use, and to fix the proportion, the mode of assessment and of collection, as well as the period, of the taxes”3.
Practice has mainly shown its preference for “representatives”. More than a preference, it is
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rather something exclusive: the time of direct expression of the budgetary authorization has so to speak never existed. “The government of the people, by the people and for the people” seemed to exclude budgetary and financial decision. Generally, the referendum and the tools of direct and participative democracy are not diffuse. Not only are democracies mostly representative, but budgetary and financial matters are often considered as sensitive, dedicated to representation. However, various forms of popular participation, at the local level as well as at the national one (Switzerland, Italy, Sweden, Norway) and at the infra-national level of federal States: United-States, Switzerland…)4 actually took place. By allowing citizens (voters) to express themselves on laws or policies direct democracy has displayed various faces. It is deliberative when voters take part in the public decision-making process. Exchange and expression of opinions are then focussed upon5. Democracy is participative when it “generates extended public deliberation”6. Many tools can be used: local assemblies, random draw, right to petition... The most common one, the referendum, consists in a “direct vote of the electorate on issues exhaustively enumerated at the constitutional or the legislative level”7.
It can be mandatory or optional, decisional, abrogative, advisory … and its forms may vary: governmental, parliamentary or popular initiative, or both. In case of a referendum or a popular initiative, tax matters are sometimes excluded by the Constitution: expressively as in Italy (art. 75, par. 2) and Portugal (art. 115, par. 4, b), or implicitly as in Denmark (art. 46) or in France. In the latter country, in view of article 11, par. 1, of the Constitution (and since the 1995 constitutional reform), « reforms relating to the economic, social or environmental policy of the Nation and to the public services contributing thereof […] » may be submitted to a referendum. During the preparatory debates regarding constitutional law, the Minister of Justice refused to include financial laws on the grounds that they dealt with “matters which […] seem to belong only to the parliamentary sphere”8. A broader interpretation of the text would today be in favour of an inclusion of tax or financial issues. Lots of topics have budgetary implications, such as the removal of a public service or the public funding of
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political parties9. Besides, “taxation is both a tool of other public policies […] and the subject of public policy”10, which makes it difficult to separate the institutional, economic and therefore fiscal concerns.
Taxation is an indicator of the health of a democracy. The solutions provided by governments and parliaments to the economic and financial crises attest to it. They raise the question of democratic legitimacy in new terms in the fiscal area: crises, though being « treated as constraints, […] also offer opportunities for change”11. Two sets of elements must be taken into consideration. On the one hand, the sources of budget law are diffuse and therefore difficult to identify by the taxpayer. “This clearly is a relocation of norm production and a confusion regarding the levels of powers that raises a major problem of legitimacy”. This makes a “risk of fragmentation of the decision-making process inevitable”12. The immediate source may be national (the vote of the State budget), but another one, more of an influence actually, a more distant one, may lie partly in markets, partly in various international, general or regional organizations. On the other hand, the social and constitutional implications of the crisis have often been concealed13. If some parliaments have voted grim measures, the resistance, if not the reluctance, of others has been as remarkable as exceptional14. A referendum on EU proposals regarding the recovery of the nation’s finances was finally held in Greece on July 5th 2015 after being mentioned in 2011 by the then Prime minister and reiterated by the Minister of Finance on March 8th 2015. Though politically and economically hazardous15, the solution was legally founded. Though exceptional, it was nothing new as Iceland had resorted to referendums on several occasions16.
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Current representative democracies do not offer the necessary conditions to a viable economic and financial environment for the citizens any more. “We cannot separate the ‘political’ point of view and the ‘economic’ one, most of the economic matters having a political importance and most of the political matters having an economic importance”17. The reconciliation of representative democracy with the participative one is therefore to become effective. Political regimes make their own finance18. Whether they are representative or direct, political systems aim at providing useful tools to political decision-making. If one or the other may be picked, we have to admit that, for financial reasons, democratic institutions, owing to the defects of the representative system, need renovation. The illusion of frugal assemblies19 made way to fiscal illusions consisting in tax procedures (incentives, policies…) with debatable scope and efficiency20. Without militating for the definitive end of representative democracy, it will be simply argued here that participative democracy21 constitutes one of the useful tools to restore confidence in the political system, the financial system and the establishment of certain tax morals. To this end, we will ponder over the current exclusion of financial and tax issues from the referendum field and the other tools of direct democracy. Two arguments are mainly suggested that will be analysed. On the one hand, the bigger the country, the costlier the democracy. Practice has however demonstrated that direct democracy can be more efficient (and therefore effective) if other factors are taken into consideration (2). On the other hand democratic decision-making requires a certain skill, knowledge and capacity to explain that it has been reserved for some and/or according to a procedure of particular selection. Once again, in view of the evolution of modern access to information technologies, and the involvement of citizens in the political life, this outdated, simplistic or even condescending view of direct democracy requires caution (3).
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If costs and benefits are measured, assessing the financial impact of direct democracy can take place in two ways. The first one consists in analysing the immediate effects of direct democracy tools on public budgets, offsetting the economic excesses of representative democracy (A). The second one will highlight the potential economic benefits as well as the social ones of the participation of taxpayers to the budget decision-making process (B). In both cases, direct democracy tools are presented at best as an alternative and at least as a complement of the representative system.
Stemming from the budgetary authorization, the parliamentary government came along the continuous increase of public spending, willy-nilly. If some spending was “imposed” – the financing of war, starvation and climatic disasters for instance – other forms of spending were not saved for electoral and political reasons – like the social demand for services. The democratic theory of public finances was laid down by A. De Tocqueville22, who explained that democracy got stronger (with the extension of voting rights, for example) when spending increased, “even if the relationship of taxes to public services is correlated to democracy, unlike the opposition to taxation”23. The acceptance of tax by taxpayers is explained by their claim for tax-funded services24, which guarantees...
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