Key Organisational Choices for Financing Regional Governments in Democratic Spain

How much power to tax do really enjoy the seventeen new regional governments created in democratic Spain? What other sources of income do they dispose of? Which rules have been implemented for regulating their tax and non-tax sources of income and how are these rules influencing the behaviour of relevant political agents? These are the questions addressed in the present paper. Although no econometric estimation has to my knowledge been provided yet, the arguments and figures provided indicate that the political mobilization and the overspending incentive generated at this level of government must be considered key factors in any explanatory model of the surprising path of growth and development registered in Spain since the mid 1980s. Physical and human capital stocks increased at a spectacular rate so as to substantially narrow the gap, in comparison to European standards, that had been generated over the previous forty years of dictatorship. Public deficits and outstanding public debt remained under control. Spanish per capita real GDP soared from 2,536 Euros in 1980 to 19,456 in 2004.