Since its inception, the FTSA has been subject to periodic revisions and, hence, to the vicissitudes of national and provincial politics.
Second, it may well be that fluctuations in the FTSA transfers to the provinces are highly associated with the evolution of federal funds.
The dependent variable of this study is evolution of the main federal intergovernmental funds transferred to Argentine provincial governments as a percentage of the total amount of sharing resources (including FTSA) from 1973 to 1999.
(28) Also, there is another reason accounting for the relatively decreasing maneuvering space of provincial leaders with respect to the FTSA. Since the 1990s, provincial governments agreed to allow the national treasury as well as local and international banks to withhold coparticipation income as a security for contracting loans.
In 1975, despite the fact that the PJ held an ample majority in both chambers, President Isabel Peron approved a tax reform, in which the alleged macroeconomic improvement originated in the removal of the VAT from the FTSA, was largely offset by the fact that provincial administrations were allowed to increase their collection of inefficient and often overlapping taxes.
The study of these grants helps to uncover political dynamics more explicitly than by just tracing the evolution of FTSA. This perspective is particularly relevant for countries where the presence of institutional rigidities in its revenue-sharing regime is often counterbalanced by less unrelenting compromises on the fate of seemingly small-scale grants.