Editing Autonomous communities of Spain (section)

===Degree of financial autonomy===
{{Main|Communities of chartered regime}}

How the communities are financed has been one of the most contentious aspects in their relationship with the central government.<ref name=smith/> The constitution gave all communities significant control over spending, but the central government retained effective control of their revenue supply.<ref name=smith/> That is, the central government is still charge of levying and collecting most taxes, which it then redistributes to the autonomous communities with the aim of producing "[[fiscal equalization]]". This applies to all communities, with the exception of the Basque Country and Navarre who level all taxes and pay an annual quote for the public services provided by the State.{{sfn|Ruíz-Huerta Carbonell|Herrero Alcalde|2008|p=7}}

This financial scheme is known as the "common regime" and applies to the other 15 autonomous communities.{{sfn|Ruíz-Huerta Carbonell|Herrero Alcalde|2008|p=7}} In essence, fiscal equalization implies that richer communities become net contributors to the system, while poorer communities become net recipients. The two largest net contributors to the system are the Balearic Islands and the Community of Madrid, in percentage terms, or the Community of Madrid and Catalonia in absolute terms.<ref name=cinco>{{cite web|url=http://www.cincodias.com/articulo/economia/madrid-aporta-estado-doble-cataluna/20071129cdscdieco_1/|title=Madrid aporta al Estado más del doble que Cataluña|publisher=Cinco Días|date=29 November 2007|access-date=1 April 2012}}</ref>

Central government funding is the main source of revenue for the communities of "common regime". Redistribution, or [[transfer payments]], are given to the communities of common regime to manage the responsibilities they have assumed. The amount they receive is based upon several calculations which include a consideration for population, land area, administrative units, dispersal of population, relative poverty, fiscal pressure and insularity.<ref name=tanja/> The central government is committed to returning a specific percentage of taxes to all communities with common regime, within the differences allowed for fiscal equalization. The communities of common regime have the ability to add a surcharge to the so-called "ceded taxes"—taxes set at the central level, but collected locally—and they can lower or raise personal income taxes up to a limit.<ref name=smith/>

The Basque Country and Navarre were granted an exception in the fiscal and financial system through the first additional disposition of the constitution that recognizes their historical "charters"{{efn-lr|"Charters" (in Spanish: ''fueros'', in Basque: ''foruak'').}}&nbsp;—hence they are known as "[[communities of chartered regime]]" or "foral regime".<ref name=smith/> Through their "chartered regime", these communities are allowed to levy and collect all so-called "contracted taxes", including income tax and corporate tax, and they have much more flexibility to lower or raise them.<ref name=smith/> This "chartered" or "foral" contract entails true financial autonomy.<ref name=smith/>

Since they collect almost all taxes, they send to the central government a pre-arranged amount known as ''cupo'', "quota" or ''aportación'', "contribution", and the treaty whereby this system is recognized is known as ''concierto'', "treaty", or ''convenio'', "pact".<ref name=hacienda>{{cite web|url=http://www.minhap.gob.es/es-ES/Areas%20Tematicas/Financiacion%20Autonomica/Paginas/Regimen%20foral.aspx|title=Régimen foral|author=Ministerio de Hacienda y Administraciones Públicas (Ministry of the Treasury and Public Administrations)|access-date=1 April 2012}}</ref> Hence they are also said to have ''[[concierto económico]]'', an "economic treaty". Since they collect all taxes themselves and only send a prearranged amount to the central government for the powers exclusive to the State, they do not participate in "fiscal equalization", in that they do not receive any money back.