Une partie au moins des ressources financières des collectivités locales doit provenir de redevances et d'impôts locaux dont elles ont le pouvoir de fixer le taux, dans les limites de la loi.
Local authorities dispose of their own resources, which represent an important part of their incomes. According to information released by the national tax administration, and corresponding to 2018 figures, own resources amount to 61,1% of the total income of municipalities and 22,4 in the case of provinces (see above). During the monitoring activity, for example, the delegation was told that the income from local taxes and fees in the province of Almería represents between 50 and 60% of the total local income of the municipalities with a population greater than 5,000 inhabitants and between 20 and 40% in municipalities smaller than 1,000 inhabitants.
Some interlocutors at local level pointed out the need to improve the fiscal co-responsibility of local governments, giving them greater autonomy to determine their own income and reducing their dependence on transfers from other levels of government. They also pointed out that, to achieve this objective, it is essential to review the main elements of the system, in order to make it more efficient and equitable.
The local tax system is built on a series of inflexible and highly unpopular tax bases. In fact, local taxes are highly perceptible by citizens, if we compare them with the main taxes collected by the rest of the administrations, where they either appear hidden behind the prices of goods and services (VAT and special taxes), or they are largely disguised as they are collected as withholdings at source (IRPF). This means that both the national and the regional Administrations can, in times of economic boom or growth, notably increase their collection with reduced political costs, while the local authorities have to adopt much more noticeable measures to increase their collection.
In addition, an important part of local taxes is strongly linked to the economic cycle, which compromises the stability of their collection in the medium and long term, essential to ensure the financing of public services. Thus, the evolution of the tax on the increase in the value of urban land (the so-called municipal capital gain) and, above all, of the tax on constructions, installations and work have surely generated financial problems for many Spanish municipalities that opted in their day to expand their services and consequently their recurring expenses charged to current income that are not so much, as evidenced by their collapse with the arrival of the crisis, although during the consultations after the monitoring activity the Spanish government pointed out that, in its view, this rigidity of local taxes with respect to the economic cycle has allowed local governments taxes to fare relatively better in times of the pandemic.
The insufficiency of own resources has forced the local financing model to rest on a system of transfers with horizontal inequities that have historically been maintained (and aggravated). Of the 35,8% of total income of local governments consisting of transfers, 20,25% come from central State, in the form of the “participation in State income”, an unconditional transfer that constitutes one sources of income for municipal councils, provincial councils, and island councils, but which is not distributed with redistributive criteria.
Bigger municipalities pointed out that one of the problems that must be solved is the concentration of the local tax system in taxes with a significant degree of rigidity, whose tax bases evolve without a direct relationship with the economic activity generated in the locality or with the users of the services municipal. During the consultations after the monitoring activity, the Spanish government pointed out that these taxes allow local finances to be isolated from the economic cycle, providing them with a reliable source of funding. Furthermore, even in the most powerful source of income for local governments, the real estate tax, local governments have an important amount of discretion, deciding on the tax rate, between certain thresholds.
The rapporteurs encourage the Spanish government to take into account the problems of local authorities’ own resources in the context of a broader reform of local finances.
Notwithstanding these difficulties, the rapporteurs consider that Article 9, paragraph 3 is complied with in Spain.