Consenting to Centralization? Comparing the Subnational Delegation and Abdication of Fiscal Authority in Argentina and Australia

Abstract

Why do some subnational governments consent to the centralization of fiscal authority? This article’s explanatory framework is built on the cases of Argentina and Australia. It adopts an inverse perspective to explain why subnational entities in these two cases assented to revenue centralization during moments of sudden economic change. In the case of Argentina, subnational abdication of revenue powers has unexpectedly resulted in a more predictable and formalized fiscal co-responsibility. By contrast, in Australia, the abdication of borrowing powers and the permanent loss of income tax revenue following a temporary delegation have unexpectedly caused a large vertical fiscal accountability gap.