During the military regime in Brazil (1964–1985), enrollment ratios in primary education grew substantially in the first decade under dictatorship, but stagnated in the mid-1970s. This paper shows that education spending might depend on the levels of centralisation in tax matters. Using panel data regressions and qualitative evidence, we argue that a massive big push industrialisation programme increased the pressure on external accounts, leading the government to intensify an export incentive policy based on tax subsidies that decreased the income of subnational governments. As a result, the capacity of funding mass education was compromised in the second half of the 1970s.

By the turn of the 1990s, tax competition among national governments had emerged as a powerful law-making practice. The possibility of tax competition essentially depends on the design of transnational law, such as European law. This Article examines the change of economic, political, and legal ideas that have shaped responses by the European Communities and the European Union (EU) to income tax competition. It asserts that under the post-war settlement of embedded liberalism and moderate market integration, tax competition was not perceived as a fully developed phenomenon. Under increased cross-border economic mobility in the 1990s, tax competition became a critical concern but received a liberal and permissive reaction from the EU. In the 2010s, governing tax competition in the EU became a more vital topic. Still, in the contemporary EU, turning political ideas into legal rules capable of addressing tax competition remains hampered by the EU law requirement of unanimous decision-making. The European choice of whether and how to address tax competition involves profoundly contrasting ideas on the means by which to govern the socio-economic reality. The decision between spontaneous and regulated income tax integration is therefore a salient political question, but the unanimity rule undermines political contestation over tax competition and over the European model of fiscal federalism. The Article comes to a close by reflecting on whether the EU legal order offers means to overcome the deadlock of unanimity and whether it could accommodate a more properly political contestation over the Europeanisation of income taxation.

Extant literature concurs that fiscal transfers affect local democracy when they grant subnational governments nontax revenue. Yet there is nonetheless a mismatch between this concept and existing measures, which consider the whole transfers local governments receive, including both tax and nontax revenue. This article studies the Fondo Común Municipal (FCM), the most important intergovernmental grant in Chile, and provides a novel measure of nontax revenue. It uses this measure alongside the whole FCM transfer to test the rentier hypothesis. On the one hand, it shows that both measures increase the incumbent party vote share, although the effect of our measure is smaller. On the other hand, it finds that the FCM transfer has an impact on the probability of reelection and the competitiveness of elections, but this effect disappears when using our measure. Overall, the findings suggest that rents from transfers do not lead to strong electoral dominance in unitary states.

There is general consensus that tax havens have long played a major role in the evolution of the capitalist system on a global scale. There is also no doubt that Switzerland is one of the first, if not the first, tax haven to have emerged, as well as one of the most important in the world. However, knowledge and understanding of the history, particularly the distant past, of tax havens remains lacking, despite the considerable volume of literature devoted to them. Therefore, this article attempts to make two innovative contributions. The first is an attempt to explain the emergence of the Swiss tax haven, by analyzing the processes and factors whose intertwining led to its emergence. It thus improves the general understanding of the genesis of tax havens at an international level. The second contribution is to show that already on the eve of World War I, the Swiss Confederation possessed the necessary characteristics for a tax haven.

Buchanan's first writings about federalism and fiscal justice were “'Federalism’: One Barrier to Labor Mobility” and “A Theory of Financial Balance in a Federal State,” two term papers that he wrote before his dissertation and that have never been discussed before. Studying them allows us to complete the recent literature on the origins of Buchanan's fiscal federalism. We show that most of Buchanan's ideas about fiscal equity were already in these works, and also that Buchanan made other claims and used other arguments – about mobility, for instance – that were absent from the dissertation but remained important to him for a long time. We also analyze these essays in the context in which Buchanan was at that time, namely the economics department of the University of Chicago. We show how Buchanan fed on, not to say was influenced by, the courses for which he wrote these essays. This allows us to shed new light on the role Theodore Schultz, D. Gale Johnson, Henry Simons, and Roy Blough, played at the beginning of Buchanan's career.

Many fiscal federal scholars argue, often implicitly, that transfer dependence generally bolsters subnational creditworthiness by signalling a higher likelihood of national bailouts for distressed governments. This article argues that dependence fails to bestow general benefits on local borrowers because it suggests an inability to generate additional revenues in the event of fiscal distress, and because this inability does not, contrary to the expectations of many, necessarily translate into higher bailout expectations. Ultimately it is the nature, not the level, of transfers that affects local creditworthiness, whether through bailout or non-bailout channels. Stable and predictable payments, including robust equalization systems, support local creditworthiness, while volatile and unpredictable transfers do not. The article supports these arguments with a review of documents issued by the major international credit rating agencies and cross-national statistical analyses of bailout probabilities and standalone credit ratings issued by Moody’s Investors Service. It also discusses the implications of the findings for work on the fiscal discipline of subnational governments.

Two main elements characterize a country as federal and the development of its federal system. The first one is directly connected to competences and how regions may or may not have powers over public policies. The second one focuses on the fiscal arena, and how regions generate their own income and share it with the central government. This paper describes from a historical point of view the different phases that the Spanish federal process has followed since its beginning in 1978 up to the last reform in 2016. These phases are related to the composition of both the regional and the national governments. It is therefore is important to investigate the connection between changes in these compositions and how they may have affected the phases of decentralization. Employing the new institutionalism paradigm and seeking for critical junctures in the different moments, we show how national governments are more important in shaping this process than regional ones.

The European Union budget is small and fulfils only a limited range of functions, yet it provokes regular disputes among the Member States and institutions of the Union. This paper describes the structure of the budget and shows that standard theories, such as fiscal federalism, are not well-suited to analysing how the EU budget operates or the political economy behind it. The paper then looks at how much the UK contributes towards the EU budget and explains why some of the claims made about it in the public discourse are inaccurate.

This paper examines the background to calls for further fiscal decentralisation in Scotland in the light of theories of fiscal federalism. In particular, it examines whether spatial differences in preferences, which are central to ‘first generation’ theories of fiscal federalism can be argued to play a central role in the case for granting Scotland further tax and spending powers. ‘Second generation’ theories of fiscal federalism draw attention to the political economy of allocating tax powers to different levels of government. Some of the authors in this strand of theory argue that the case for allocating tax powers to subnational governments can be made in terms of ‘accountability’ – the notion that local politicians can be better held to account for the outcomes of policy actions. Our empirical analysis suggests that there is no clear difference in preferences between Scotland and the rest of the UK along a number of key political dimensions. However, the Scottish parliament enjoys substantially higher levels of trust among the Scottish electorate than does the UK parliament.

This article describes the centralised nature of the UK, briefly describes the changes now under way in Scotland and Wales and then analyses differences in output per head as between nations and regions. It then considers the scope for devolution, including fiscal devolution within England. The United Kingdom today is one of the most fiscally-centralised of all OECD countries, but there will soon be reform in Scotland and Wales, with significant devolution of tax-raising powers to Edinburgh and Cardiff. In England, there is currently no ‘state’ or ‘regional’ tier of government. There have been significant differences in GDP/GVA per head of the nations and regions of the UK for many decades. Efforts to ‘rebalance’ the GDP/GVA totals shown above have involved public expenditure and investment programmes over several decades. The results of the UK's centralised distribution of resources, if any, on changes in regional and sub-regional performance are little studied. A highly-centralised system of taxation and public expenditure is not, it would appear, a guarantee of territorial economic equalisation. In a potentially radical policy departure, George Osborne has moved further than any minister in recent times towards a form of city-regional devolution within England. In the first instance, any devolved power is likely to be over public expenditure, though in the longer term fiscal devolution may become possible. The move towards a quasi-federal UK is now well under way.