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Fiscal federalism and regional integration: Lessons from Spain
Forum of Federations Forum des fédérations Fiscal federalism and regional integration: lessons from Spain Teresa Garcia-Mila Regime Asymmetry Fiscal Asymmetry Large devolution in expenditures Level of Responsibilities Responsibilities Grouped by Fiscal Responsibility Foral Regime Common Regime High Responsibility Low Responsibility Forum of Federations 700-325 Dalhousie Street Ottawa, Ontario K1N 7G2 Canada Tel.: (613) 244-3360 Fax: (613) 244-3372 www.forumfed.org Email: forum@forumfed.org Forum des fédérations 700-325, rue Dalhousie Ottawa (Ontario) K1N 7G2 Canada Tél.: (613) 244-3360 Téléc.: (613) 244-3372 www.forumfed.org Courrier électronique : forum@forumfed.org International Conference: Fiscal Federalism in the Mercosur Porto Alegre, June 26-27, 2002 Fiscal federalism and regional integration: lessons from Spain Teresa Garcia-Mila Universitat Pompeu Fabra Barcelona – Spain Figure 1: Asymmetric Fiscal Decentralization in Spain Foral Regime Common Regime – High Responsibility Legend Baleares Canarias Murcia Madrid Castilla- La Mancha Valenciana Aragón Cataluña La Rioja País Vasco Cantabria Navarra Asturias Extremadura Castilla-León Galicia Andalucía Common Regime – Low Responsibility Regime Asymmetry Constitution (1978) establishes regime asymmetry LOFCA (1980) develops the details a. Foral regime High responsibility b. Common regime High responsibility 151 Low responsibility 143 Fiscal Asymmetry a. Large devolution in expenditures b. Small devolution in revenues Level of Responsibilities Responsibilities HIGH LOW (art. 151) (art. 143) Forestry, agriculture, livestock and fisheries in internal water Urbanism and housing Roads Ports and airports without commercial activity Hydraulic exploitations, channels and irrigation Environmental protection Monumental patrimony of the Autonomous Community, cultural promotion and of the regional languages, libraries, museums and conservatories. Self-government institutions Internal commercial fairs, sports promotion and tourism HIGH only * Education (management of the educational system at all levels) * Health (medical assistance at all levels) Table 1: 1999 GDP per Capita of Regions in Spain Grouped by Fiscal Responsibility 1999 GDP per Capita (euros) (Relative to Average for Spain = 100) Foral Regime Navarra 18,492 (130) País Vasco 17,379 (122) Common Regime High Responsibility Andalucía 10,067 (71) Canarias 13,496 (95) Cataluña 17,570 (124) Galicia 11,266 (79) Valenciana 13,510 (95) Low Responsibility Aragón 15,464 (109) Asturias 12,739 (90) Baleares 17,514 (123) Cantabria 13,410 (95) Castilla-León 12,990 (92) Castilla-La Mancha 11,617 (82) Extremadura 8,774 (62) Madrid 19,254 (136) Murcia 11,692 (82) La Rioja 16,313 (115) GDP data are from Contabilidad Regional de España, Instituto Nacional de Estadística (INE). Population data are from Proyecciones y Estimaciones Intercensales de Población, INE. Evaluation of the Spanish model 1. Before de 2002 reform • Complex system. • Unstable and with lack of transparency • Expectations on links between deficit and additional funds (bailout?) • Fiscal Asymmetry – separation expenditure and revenue responsibilities Debt/GDP Comunidades Autónomas 1986 19871988198919901991199219931994 1995 1996199719981999 Andalucía 0.8 0.70.81.53.04.05.76.97.6 7.8 8.89.59.38.7Aragón 0.4 0.50.70.60.51.32.43.84.7 4.6 4.85.35.25Asturias (Principado de) 0.9 0.90.71.21.42.53.33.23.8 3.8 3.83.94.24.1Balears (Illes) 0.3 0.30.20.40.61.92.53.03.1 2.8 2.62.82.82.6Canarias 2.0 1.61.71.71.72.52.94.24.9 4.6 5.84.74.63.8Cantabria 1.5 2.52.64.76.67.26.26.05.2 4.1 2.72.92.63.1Castilla y León 0.4 0.30.30.30.61.21.82.43.4 3 3.23.53.53.3Castilla-La Mancha 0.3 0.20.30.70.70.81.82.22.9 2.7 2.82.93.12.8Cataluña 2.5 2.62.42.62.63.24.25.36.7 7.9 8.69.398.8Comunidad Valenciana 0.9 0.80.81.22.13.24.45.56.4 6.4 7.27.88.39.1Extremadura 0.4 0.30.30.30.50.73.85.26.2 6.1 6.46.26.46.5Galicia 0.6 0.50.40.61.84.45.97.79.0 8.5 99.298.8Madrid (Comunidad de) 0.2 0.40.61.21.62.52.83.64.1 3.8 4.24.54.64.6Murcia (Región de) 1.2 1.82.13.23.64.65.35.75.8 5.4 5.254.74.6Navarra (Comunidad Foral) 1.6 1.41.01.00.80.64.68.511.4 10.3 9.58.77.56.8País Vasco 1.9 1.92.22.42.93.44.15.36.3 6.4 6.87.16.25.4Rioja (La) 0.4 0.30.31.12.23.73.53.83.4 4.1 3.53.13.13.2 (Provisional) Evaluation of the Spanish model 2. The 2002 reform • Regime Symmetry – Partial as Foral and Common coexist • Stability – unlimited duration • Simplicity and Clarity – integrate health in general financing, plus (partial) regime symmetry • Fiscal Symmetry – Expenditure decisions on the margin depend on the regional governments