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and social service provision) was decentralized except one that still remains
under central control, Social Security. As policy decentralization increased, so
did their claim for fiscal transfers to sustain them.
Over the last three decades, political and fiscal decentralization in Spain have
entered a spiral with no apparent end. The Basque nationalists, in power since
the transition until 2009, aspire to assume control over the few policy areas
still directed fromMadrid, including social security. In turn, Catalonia displays
an unanimous voice in demand of its homogenization with the Basque Country
and Navarra, denouncing what they deem as an unjustifiable discrimination.
Thus, they demand to have the same level of fiscal autonomy as the Basque
Country and Navarra have enjoyed since the very beginning of the process.
Being a wealthy region under the common framework, Catalan elites feel,
much like Baden-Wurttemberg in Germany, that the level of redistribution
implied by the status quo is excessive.
The status quo involves a centralized system of interpersonal redistribution,
originally established by Franco and massively expanded by the Socialists dur-
ing the mid 1980s and early 1990s, and central control until the early 1990s
of the bulk of revenue collection and distribution of resources across regions.
This system generates large levels of redistribution by centrally raising revenues
from the areas with a larger tax base (Catalonia, Madrid, and Baleares) and
transferring a large share of those revenues to less developed regions (Galicia,
Extremadura, and Andalucia). Contentions over fiscal structures in Spain are
clearly endogenous: what the former group denounces as excessive extraction,
the latter celebrates as solidarity.
Unsurprisingly, conflicts over the allocation of fiscal resources across terri-
tories became increasingly prominent over the years. These conflicts concern
two issues: how much revenue is to be raised centrally as opposed to regionally,
and how the money collected by Madrid is to be allocated across regions. An
overview of the dynamics of fiscal federalism in Spain reveals the impossibility
of reaching a stable, self-enforcing arrangement (Beramendi and M aiz
2004
;
Le on-Alfonso
2007
). Since 1993, when Catalonia extracted for the first time
control over 15% of the income tax revenues in its territory in exchange for
supporting the Socialists' minority government in Madrid, the system has been
in constant flux. 1996 saw the 15%growto30%. When this 30%was general-
ized, new demands reached 50%. When the Conservatives gained an absolute
majority in 2000, the process stalled, to restart in 2004-2008, a period in
which Catalonia traded its support to Zapatero's minority government for the
opportunity to pass in Madrid a new state constitution and impose a new fiscal
federal agreement that implies a fundamental overhaul of the current system
and a reduction in previous levels of redistribution. And so forth and so on.
This succinct overview suggests that, as in the case of the EU, some
given
factors shape processes of decentralization: to a significant extent, the consti-
tutional arrangements of 1978 reflect special deals secured by some regions, in
particular the historical fiscal privileges that the Basque Country and Navarra
managed to keep even under Franco's dictatorship (1939-1975). It is also the
