The uneasy coexistence of the Spanish foral and common regional finance systems

Antoni Zabalza and Julio López-Laborda

Working Papers. Serie EC from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper develops a model which integrates the foral or cupo system applied to the Basque Country and Navarre, with the common system applied to the other fifteen Spanish autonomous communities. This approach contributes to the understanding of the relationship between foral, non-foral and central jurisdictions, and offers a complete and integrated picture of the whole Spanish system of regional finance. We show that the cupo is nothing more than an indirect form of measuring the equalising transfer between the central government and the corresponding autonomous jurisdiction. If expenditure needs are defined consistently over the whole system, the cupo form per se -the indirect manner of measuring the transfer- is completely neutral. The cause of the economic advantage associated with the cupo is the particular imputation procedure used to measure it, which biases the scales in favour of foral communities. The model can readily be estimated with available empirical data. Regarding the Basque Country, we find that out of a 109.1% observed excess of resources per capita, an excess of 61.1% is justified by differences in responsibilities between this jurisdiction and non-foral communities, leaving an unjustified excess of 29.8%. The model has clear implications for reform: we show that, even respecting the indirect form of measuring it, the cupo can be redefined so that foral communities have access to the same amount of resources per capita as non-foral communities. El trabajo desarrolla un modelo que integra los sistemas común y foral de financiación autonómica. Este enfoque permite entender las relaciones entre el nivel central y las comunidades de régimen común y foral y ofrece una imagen completa e integrada de la financiación autonómica. El trabajo muestra que el cupo no es más que una forma indirecta de calcular la transferencia de nivelación entre el gobierno central y la correspondiente región. Si las necesidades de gasto se miden de manera consistente para todo el sistema, la forma de cálculo del cupo es completamente neutral. La existencia de una ventaja económica deriva del procedimiento de imputación que se sigue para calcular el cupo. Estimando el modelo con los datos disponibles, encontramos que, de un exceso observado de recursos per cápita del 109,1% para el País Vasco, un 61,1% está justificado por las diferencias competenciales con las comunidades de régimen común, quedando un exceso injustificado del 29,8%. El modelo tiene claras implicaciones de reforma: incluso respetando el procedimiento indirecto para calcularlo, se pude redefinir el cupo de manera que las comunidades forales dispongan de los mismos recursos per cápita que las comunidades de régimen común.

Keywords: Financiación regional; España; sistema común; sistema foral. Regional Finance; Spain; Foral System; Common System (search for similar items in EconPapers)
JEL-codes: H7 (search for similar items in EconPapers)
Pages: 1 pages
Date: 2014-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The uneasy coexistence of the Spanish foral and common regional finance systems (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasec:2014-02

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