good idea, but logically impossible because the map uses provinces instead of hexes, so 1 province would have a distance of 1 unit, no matter the size of the province. That would mean that a well organized, european government would have a much shorter distance (smaller provinces in europe) that a rag-tag asian government would (much lager provs out there) before occur the same penalty.
what might be implimented is a minus for the total number of provinces you have compared to your centralization/decentralization. this would have something of an effect like (for example) your slider right in the middle could have X amount of provinces under its control before it occurs a -1 (or maybe -2) percentage to ALL provinces for each province it controls over the number X. As you moved to more centralized your number, X, would grow higher, and get lower as you went decentralized. basically this would be a way of saying as you put more power into the hands of fuedal lords instead of a central monarchy, corruption is much harder to control. Large nations like Spain, or Russia, would have only the choice to go centralized or face mega corruption. That right there is proof enough for a logical and historical reasoning for this rule.