The Asymmetric Distribution of Taxation Powers in the Spanish State of Autonomies: The Common System and the Foral Tax Regimes VIOLETA RUIZ ALMENDRAL The purpose of this article is to analyse the present arrangements for financing devolved government in Spain and, specifically, to explain why there is such great asymmetry between the tax powers of the historic or foral autonomous communities (ACs) – the Basque Country and Navarra – and the so-called ‘common system’, which applies to the other ACs. This article focuses on the assignment of taxation powers, as this area has very recently been substantially reformed and is bound to become one of the main issues in future relations between the central state (hereafter the ‘State’) and ACs. Although differences between the common and foral tax systems prevail, the 1997 and 2002 reforms of the common financing system have led to some convergence. Greater convergence has been identified by some commentators as a means of increasing the transparency and fiscal responsibility of the whole financing system, and making a distinction between the legitimate exercise of taxation powers and tax competition among ACs, which is prohibited by the Spanish Constitution (Ramallo, 1995: 13–14). THE PROBLEM OF CLASSIFYING SPANISH DECENTRALIZATION The Spanish Constitution of 1978 deliberately omits any reference to the form of the State. That is, it does not describe it as centralized, federal or regional. After almost 40 years of Franco’s highly centralized government, consensus on this matter was anything but easy to obtain. The closest precedent for decentralization in Spain was established by the Constitution of 1931 – the Second Spanish Republic – and lasted only eight years (1931–39). This model was intentionally not followed; its tragic ending in the Civil War did not make this advisable. For over a century before the Republic, Spain had been a centralized state, with unresolved regionalist demands (López Guerra, 1996: 145ff; Moreno, 1999: 150ff). Regional and Federal Studies, Vol.13, No.4, Winter 2004, pp.41–66 PUBLISHED BY FRANK CASS, LONDON Violeta Ruiz Almendral, ??? 134rfs03.qxd 25/11/03 08:50 Page 41 Proof