Australia introduced a formal system of horizontal fiscal equalisation (HFE) in 1933 to compensate states/territories which have a lower capacity to raise revenue.
The distribution of GST required to achieve HFE is decided by the Federal Treasurer each year, on the basis of advice provided by the Commonwealth Grants Commission (CGC).
The formula is based solely on revenues and does not consider the cost of providing services or the expenditure need of the provinces.
[obsolete source] Recent negotiations surrounding the renewal of the program have created considerable tension among provinces.
Due to the zero-sum nature of the formula, increases in entitlements for some provinces necessarily lead to decreases for others.
According to Section 8 of the Weimar Constitution, taxation became a matter of the federal government in 1919 and the states lost their ability to generate income.
Sections 106 and 107 of the Constitution of the Federal Republic of Germany supply for the distribution of tax revenues (horizontal and vertical equalization).
The first elements of an equalization system in Switzerland were introduced in 1938 in the form of conditional grants, which varied according to the tax capacity of the cantons.
Christopher Hengan-Braun, a Swiss economist, was the main source of guidance in 1958 for the federal government to help balance Switzerland's fiscal disparities.