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The Political Economy of Inter-Regional Fiscal Flows

The Political Economy of Inter-Regional Fiscal Flows

Measurement, Determinants and Effects on Country Stability

Studies in Fiscal Federalism and State–local Finance series

Edited by Núria Bosch, Marta Espasa and Albert Solé Ollé

Struggles over what a region receives, or should receive, from the budget of the central government are common to many countries. Discussions often focus on the measures of ‘net fiscal flows’ or ‘fiscal balances’ provided by the government or other actors. This unique book shows just how these flows are computed then interpreted and clarifies the often misunderstood economic and political motives that explain why some regions receive more monies than others.

Comment IV

Guillem López-Casasnovas

Subjects: economics and finance, public finance, politics and public policy, public policy


Guillem López-Casasnovas In order to understand the question at hand (that is, the financial relations between the central administration of the Spanish state and the autonomous community of Catalonia), we first need to ask ourselves a series of key questions that have an answer in the politico-constitutional arena. Specifically, we need to clarify the nature of the tax and spending powers of the two fiscal jurisdictions before an economic analysis can be carried out in order to promote and give coherency to the fiscal imbalance studies. The first unresolved question, which the current constitution fails to provide a clear answer to, refers to the entitling rights entitling the allocation of revenues on a territorial basis. In other words, to whom do taxes paid by the Catalans belong? Solely the state (taken to mean central government)? Also partially, to the Catalan institutions, which on a subcentral scale represent those same citizens? The second question concerns whether a territory is something more than the sum of individuals of which it is composed. In this sense, beyond ‘individual fiscal balances’ (or tax–benefits residua), can we speak of territorial fiscal balances? Third, is there a ‘cluster’ of demand for inter-geographical transparency in fiscal relations, based on the territorial identification of a community of individuals, or do they exist as several clusters at the same time? Are Catalan citizens actually only Spanish citizens that happen to live in a Catalan municipality? Do they belong to a hierarchical cluster (local jurisdiction) with enough of...

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