Abstract

On December 6^th, 1978 the Spanish population implemented its new constitution by means of a referendum and finalised the transition process from the Franco regime to a modern democracy based on a parliamentary monarchy. In the next 30 years the fiscal power and the expenditure autonomy of the 17 regions, called Comunidades autónomas, increased constantly. But on the other hand, in some regions – mainly in the Catalan and the Basque regions – the demand for complete sovereignty has also become stronger, while the central government is currently unwilling to delegate any additional tax sovereignty to the regions. Therefore, this paper presents the German equalization system among the states and concludes with some policy implications to reduce the ill feelings between the central government and its respective regional counterparts in Spain.

Key word: Fiscal federalism, Spain, sub-national finance, Germany.