Who knows whom we pay taxes to? Tax visibility in a decentralized country: The case of Spain

A necessary condition for the efficiency gains that the theory of fiscal federalism assigns to decentralization to be effective is that citizens know the costs and benefits of public action. However, surveys show that most Spaniards are unable to correctly identify the taxes received by the various levels of government. 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 levels of government. On the basis of these characteristics, the paper proposes a number of recommendations to improve citizens' fiscal visibility: a better definition and simplification of the allocation of expenditure powers between levels of government, strengthening of regional tax powers, highlighting the link between taxes and expenditure, and improvement of the population's educational level.