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Castilla-la-Mancha to push for protection of the status quo, championing soli-
darity and equality. To be sure, political contentions over the fiscal structure in
Spain reflect this logic. In the next section, I explore how these contentions have
evolved over time, and the conditions under which those demanding change
have managed to achieve partial reforms to the system. I pay particular atten-
tion to two policy areas: the timing and pace of the regionalization of the
income tax, as part of broader changes in Spain's fiscal arrangements; and the
fate of the case to decentralize social security.
ENDOGENOUS DECENTRALIZATION AND CHANGES TO THE STATUS
QUO: THE PARTIAL ACHIEVEMENT OF FISCAL AUTONOMY
AND THE RESILIENCE OF SOCIAL SECURITY
In addition to the distributive tensions between a group of wealthier and rel-
atively more equal regions (Catalonia, the Basque Country) and a group of
poorer and relatively more unequal regions (Andalucia, Extremadura, Galicia),
the Spanish process of decentralization reflects a fundamental tension between
those seeking the reduction of asymmetries across policy realms (including
revenue generation and allocation) and those seeking to maintain them. The
Basque Country and Catalonia are not only richer and more equal. They are
also regions where a different national identity has been mobilized by parties
that have long enjoyed a dominant position in the regions' political spectrum,
the PNV in the Basque Country and CiU in Catalonia. Moreover, these par-
ties are influential players in the national parliament. The presence of national
identity as a second dimension introduces a centrifugal element that counterbal-
ances an otherwise centripetal institutional design and contributes to shaping
the dynamics of political and fiscal decentralization in Spain. In the case of
the Basque Country and Catalonia, national identity reinforces the distribu-
tive incentives to seek a more decentralized fiscal structure. At first, national
parties resist these pressures. Over time however, the political influence of
these forces changes with important consequences for the evolution of Spain's
fiscal structure. By way of background, a brief overview of the dynamics of
decentralization in Spain follows.
After the initial steps of Spain's federalization process, the first big inflec-
tion point came with the launching of the I Acuerdos Auton omicos (First
Autonomous Agreements), signed by both the PSOE and UCD in 1981.This
was the very first attempt to control the emerging dynamics of the system,
since at the early stages of Spanish democracy no avoidable instability could
be afforded. The failed coup d' etat in February 1981 provides us with a good
indicator of the complexity of the environment at the time. The objectives pur-
sued by the Socialists and the UCD government are easily traceable through
the contents of the Agreements (MAP-1982): clarification and generalization
of the number and institutional design of all of the ACs in the process of being
formed; adoption of a common position regarding the fiscal arrangements to
be implemented; and, last but certainly not least, the creation of a law aimed
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