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Historically, local taxation has been a principal source of finance where local independence against state formation is strongest, an appropriate local resource base exists, and services provided have been considered to be primarily of local interest. Both the United Kingdom and the United States reflect this pattern, with even the level of local taxation in the United Kingdom being left in local hands until rate‐capping was introduced in 1984. Where the concept of the nation‐state is stronger, as in France, national grants have been much more important than local taxation, and in the Third World the lack of local resource bases leaves localities highly dependent on central funding. The expansion of local government responsibilities across North America and Europe in the twentieth century as part of increased state intervention nevertheless necessitated increased central funding both to supplement local fiscal bases under severe pressure, and to reflect the national importance of the services that local government has undertaken. Even so, there remain huge variations between states, with local taxation as a proportion of total tax revenue among European states varying in 2005 from over 30 per cent in Sweden and Denmark to less than 5 per cent in the UK, Netherlands, Ireland, and Greece.