Fiscal federalism relevant for all kinds of government: unitary, federal and confederal. The concept of fiscal federalism is not to be associated with fiscal decentralization in officially declared federations only; it is applicable even to non-federal states (having no formal federal constitutional arrangement) in the sense that they encompass different levels of government which have de facto decision-making authority. This, however, does not mean that all forms of governments are 'fiscally' federal, only that 'fiscal federalism' is a set of principles that can be applied to all countries attempting 'fiscal decentralization'. In fact, fiscal federalism is a general normative framework for assignment
Fiscal federalism in a particular country, can be determined by using certain criteria that the author has evolved. The kind of policy solution to be applied will depend on the nature of asymmetry (VFA). Thus, there can be three types of VFAs: The VFI-VFG-VFD offers a nice framework to understand and debate issues surrounding fiscal federalism. VFD is a concept that has entered the lexicon of fiscal federalism and has the power to clarify the debate on intergovernmental financial relations. Vertical Fiscal Gap as the revenue deficiency arising from a mismatching between revenue means and expenditure needs. OECD Network on Fiscal Relations