Fiscal Federalism and Political Decentralization
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Fiscal Federalism and Political Decentralization

Lessons from Spain, Germany and Canada

Edited by Núria Bosch and José M. Durán

This book analyzes political decentralization and fiscal federalism in Canada and Germany, both traditional federal countries, and in Spain, a unitarian country engaged in the last two decades in a process of decentralization. Three key issues required for a well designed financing system are analyzed in depth, namely: tax assignment, equalization grants – i.e. redistribution of money from the wealthy regions or the national government to poorer regions, and the role of local governments in the administration of taxes.
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Chapter 10: Current Situation and Proposals for Reform of Spain’s Tax Administration

Alejandro Esteller Moré


1 Alejandro Esteller Moré 1 INTRODUCTION Since the mid-1980s, successive reforms to the financing of Spain’s Autonomous Communities (ACs) have largely focused on the ongoing correction of vertical fiscal imbalances, on the revenue side, and on increasing the degree of tax autonomy. As for the latter aspect, greater AC tax autonomy has basically been achieved by means of assuming legislative power over personal income tax and other ceded taxes (i.e., wealth tax, inheritance and gift tax, and capital transfer tax). Under the present financing model, in effect since 2002, tax autonomy has been expanded yet further (see, for example, Durán and Esteller, 2005). Obviously, such reforms must be described as positive overall, although certain ACs may well still wish to take such reforms further, raise what they consider to be insufficient levels of financing, and/or widen the range of taxes over which they can exert tax autonomy (e.g., VAT and corporation tax). However, in recent years, these types of demands from ACs have been joined by calls for institutional reform of the tax administration. In particular, they would like to play a more active role in the setting of taxes in their respective territories. In fact, this can be seen as a demand for greater fiscal autonomy. After all, responsibility for administering taxes may be characterized as ‘fiscal autonomy in the widest sense’ as opposed to ‘fiscal autonomy in the strictest sense’, which would involve the exercise of legal powers (Ramallo and Zornoza, 1995, p. 40). In...

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