Taxation

Unitary and federal systems

The distinction between unitary and federal states

No modern country can be governed from a single location only. The affairs of municipalities and rural areas must be left to the administration of local governments. Accordingly, all countries have at least two levels of government: central and local. A number of countries also contain a third level of government, which is responsible for the interests of more or less large regions.

The distribution of powers between different levels of government is an important aspect of the constitutional organization of a state. Among states with two levels of government, distinctions can be made on the basis of the greater or lesser autonomy granted to the local level. The British government’s respect for local self-government has always been a characteristic of its constitution. In contrast, France traditionally had kept its local authorities under strict central control. In countries with three levels of government, the distribution of powers between the central and the intermediate governments varies. States formed through the union of formerly independent states usually maintain an intermediate level with considerable legislative, executive, and judicial powers (as in the United States, Argentina, and Switzerland), though some grant few powers to ...

; residuary powers are vested with the Centre and the major taxation powers lie with the Central authority. Alongside these unitary features, there is a division of subjects between the Centre and states and a concurrent list. Judicial review of Centre-state relations exist as in a federal system. On the balance, the Indian political system has federal features which are circumscribed with a built-in unitary core.

Compounding policy consisting o f strong regional governments and a general or central government, each possessing considerable atnoillit of autonomy in the exercise of competences allotted to them by the constitution....