Do you know to whom you pay your taxes? The case of decentralised Spain

Surveys show that most citizens are unable to correctly identify the taxes received or the services provided by the different levels of government. This shortcoming represents an obstacle to democratic accountability and for the efficiency gains that the theory of fiscal federalism attributes to fiscal decentralisation be effective. Exploiting the 2015 wave of the Spanish Institute for Fiscal Studies' Fiscal Barometer, this paper empirically determines the profile of citizens who are best able to identify the allocation of taxes among the central, regional and local levels of government. The estimates suggest that these citizens are those who are able to identify the government that provides the services financed by those taxes, who correctly identify other taxes received by the same government, who reside in a foral region, and who enjoy a high level of education.

Automated summary

Surveys indicate that a majority of citizens are unable to correctly identify the taxes received or services provided by different levels of government. This lack of knowledge hinders democratic accountability and the potential efficiency gains from fiscal decentralisation. Utilizing data from the Spanish Institute for Fiscal Studies' Fiscal Barometer in 2015, this study identifies the characteristics of citizens who are most adept at identifying tax allocation among central, regional, and local governments. The findings suggest that individuals who can identify the government responsible for service provision, correctly identify other taxes received by the same government, reside in a foral region, and have a higher level of education are best able to identify tax allocation.