Conclusion

The notion of a ‘fiscal constitution’ allows us to determine the extent of tax autonomy actually exercised by different levels of government in a federation. Even measured against a broad conception of tax autonomy, such as Kenneth Wheare’s classic view featuring free transfers or untied/unconditional grants, it is perhaps, despite not meeting the ideal, a ‘second-best way’ in terms of the operation of a federal system.

In Argentina, even taxes reserved to the provincial jurisdiction have become targets of regulation which circumvents and restricts provincial tax autonomy, including through mechanisms of co-determination that involve carrot-and- stick bargaining, as described above—frequently offering greater revenue transfers or debt relief in exchange for ever more limited sub-national taxa­tion capacities. Meanwhile federal spending power (while seldom explicitly coercive) plays an important centralizing role that moves the federal system closer to a principal-agent model. These restrictions are sometimes entailed by necessary or advisable tax harmonization, along lines also agreed upon in other federations or countries with multi-level governments.

The reader may ask whether Argentinian provinces are playing a bargaining game while also suffering from a ‘Stockholm syndrome’ in which they cede power to federal authorities and agree to restrictions on their tax powers in exchange for debt relief and additional ‘easy money’ from federal transfers.

Sub-national tax autonomy in Argentina today, then, does not refer to an autonomy exercised in a pure sense, in terms of the complete separation of tax sources envisaged in the 19 th century, but to a qualitatively different one. It has emerged from legally validated mechanisms of negotiation, derived from con­ceptions frequently developed within the national government, which have come to shape, beyond the requirements of reasonable tax and fiscal harmo­nization, a scheme of ‘regulated autonomy'. Such a landscape has little corre­spondence with the optimistic view of financial autonomy envisaged for fed­eral countries by Kenneth Wheare. It shows, indeed, an increasing tendency to uniformity and centralization in tax matters in Argentina.

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