There is a tendency for academic and policy-making circles to advocate the decentralisation of taxation powers to regions as a way of improving their accountability. But these proposals overlook an important aspect of fiscal autonomy: when is this power employed? And what kind of taxes are introduced?
The paper will answer these questions by studying differences in the taxation of policy of Spanish Autonomous Communities (ACs) since 1995. The objective is to identify the set of conditions that explain the timing at which taxes are introduced, the kind of taxes that are imposed and the level of taxation rates. The paper will evaluate the relative influence of the preferences of regional political forces for different taxation regimes and the need for revenue that is determined by regions’ spending and budgetary commitments. By shedding light on the motivations underlying taxation policy at the sub-state level, we will inform about a recent and compelling trend which may have an important impact for public policy making in Multi-Level Systems.
