The Relationship between the Capacity of the Spanish Central Government to Retain Tax-Revenue Shares and Interregional Inequality

Abstract

I examine the relationship between the dynamics of the size of the Spanish central government, by looking at central government tax-revenue-retention shares in different domestic regions, and regional-income heterogeneity. Annual data correspond to the 1986–2001 period. In addition to interregional inequality, other factors, such as per capita transfers from the central government, regional saving rates, and years in which there is a change in the party leading the central government, also contribute to the decreasing dynamics of revenues that are retained by the Spanish central government.