Degree of financial autonomy Autonomous communities of Spain

how communities financed has been 1 of contentious aspects in relationship central government. constitution gave communities significant control on spending, central government retained effective control of revenue supply. is, central government still charge of levying , collecting taxes, redistributes autonomous communities aim of producing fiscal equalization . applies communities, exception of basque country , navarre.

this financial scheme known common regime . in essence, fiscal equalization implies richer communities become net contributors system, while poorer communities become net recipients. 2 largest net contributors system balearic islands , community of madrid, in percentage terms, or community of madrid , catalonia in absolute terms.

central government funding main source of revenue communities of common regime . redistribution, or transfer payments, given communities of common regime manage responsibilities have assumed. amount receive based upon several calculations include consideration population, land area, administrative units, dispersal of population, relative poverty, fiscal pressure , insularity. central government committed returning specific percentage of taxes communities common regime, within differences allowed fiscal equalization. communities of common regime have ability add surcharge so-called ceded taxes —taxes set @ central level, collected locally—and can lower or raise personal income taxes limit.

the basque country , navarre granted exception in fiscal , financial system through first additional disposition of constitution recognizes historical charters  —hence known communities of chartered regime or foral regime . through chartered regime , these communities allowed levy , collect so-called contracted taxes , including income tax , corporate tax, , have more flexibility lower or raise them. chartered or foral contract entails true financial autonomy.

since collect taxes, send central government pre-arranged amount known cupo, quota or aportación, contribution , , treaty whereby system recognized known concierto, treaty , or convenio, pact . hence said have concierto económico, economic treaty . since collect taxes , send prearranged amount central government competences exclusive state, not participate in fiscal equalization , in not receive money back.

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