Yes, absolutely, and that's, actually, an important point when it comes to the limits of autonomy in decentralised fiscal states in Europe. I think, going back to the question, equalisation based on needs or based on tax capacity—and I'll come on to that in a moment—is the usual means across decentralised fiscal systems of funding sub-state Governments. The exceptions to that, within the Organisation for Economic Co-operation and Development, tend to be particularly centralised countries, and they tend to be where the transfers to lower tier Governments tend to be more discretionary or based on specific programme funding, like different policy areas that are funded individually, rather than by some universal standardised formula.
In the OECD, the examples of countries that don't use this equalisation based on needs or tax capacity are the United States, the UK, France and Japan, with France being the quintessential centralised state in terms of the governmental functions, and the US having a lot of discretionary programmes—Medicaid, food stamps and so on and so forth. The UK and the US are the standout exceptions when it comes to the funding of sub-state Governments, because these are the states that have a very significant regional tier—when it comes to Wales, Scotland and Northern Ireland, anyway.
Most countries that do use equalisation have a mix. Some will equalise on the basis of needs, as we're very familiar with since the Holtham commission report in Wales. Others will tend to equalise based on a measure of the tax base of the region that will equalise based on the region's potential ability to raise revenue through its own resources. We know that, in any given region within a state, we've got income levels varying, property values varying, businesses activity varying. All of these, of course, contribute to the tax base. So, if we equalise on that, it means that regions can provide a comparable standard of public services regardless of their own ability to generate revenue through taxation. In the Welsh context, we have a weaker tax base, as we know. To provide a comparable level of services, we would have to have a higher tax rate than would be the case in England. So, equalisation on that basis is another way of doing it.
Normally, states will use a mixture of those two types of equalisation. We've got, in Australia, the Commonwealth Grants Commission that mixes both revenue-raising capacity and needs. Germany also does this. The constitutional court there very strictly interprets a rule that has equal public services across the entire country. We see a horizontal transfer—it's called the Länderfinanzausgleich—which transfers revenue from the richest Länder, like Bayern and like Baden-Württemberg, to the poorest Länder, and it's been very strictly interpreted in the German constitutional court.