Presentation delivered during the 13th Annual Meeting of the OECD Network on Fiscal Relations Across Levels of Government, 23-24 November 2017, Paris, France.

1. ASSIGNING RESPONSIBILITIES ACROSS
LEVELS OF GOVERNMENT
Spain
MINISTERIO
DE HACIENDA Y
FUNCIÓN PÚBLICA

2. Assigning responsibilities
• Particular problems found under
challenges in Spain
• Reforms carried out in the last years
• Reforms that will be implemented

3. SPECIFIC CHALLENGES
• CLASIFICATION GIVEN IN THE PAPER:
• UNCLEAR ASSIGNMENT OF RESPONSIBILITIES:
• Problems in the field of local competences.
• LACK OF RESOURCES AND FISCAL AUTONOMY and
NEED OF A BETTER CO-ORDINATION:
• More prominent problems in AACC.

4. UNCLEAR ASSIGNMENT OF
RESPONSIBILITIES: Local Reform
• Approved in 2013.
• Targets achieved and expected results
• MAIN TARGET : clarify local competences
• Necessary: local entities had been during decades delivering
some services without being awarded by law or without being
delegated by other administrations
• Specific targets:
• More rational administrative structures.
• Deliver local services with more efficiency in order to
reduce local public expenditure.
• Avoid LLEE assuming “improper competences”.

5. UNCLEAR ASSIGNMENT OF
RESPONSIBILITIES: Local Reform
• Expected results (2013-2020):
• The expected accumulated savings of the rationalization of
administrative structures will reach 1,2 billion €.
• Gains in efficiency: LLEE will be able to deliver their
services in a more efficient way, expected savings will
amount to reach 400 M€.
• Elimination of improper competences will save more than
600 M€.
• Since 2013 until today: 500 local entities have been
eliminated. This means around the 10% of the existing
before.

6. FISCAL AUTONOMY and COORDINATION:
Experts Committee Report
EXPERTS COMMITTEE:
 Created as a result of an agreement among the President of the CG and the
Presidents of the AACC.
 The mandate was to define the basis of the new financing system for the AACC.
 Composed of 21 experts.
 Report was issued at the end of July.
 2nd of November: CG and AACC started to work in multilateral meetings.
 Guidelines for the reform: linked to strengthen fiscal autonomy and to improve the
coordination among the different tiers of governments:
 Improvements of coordination: proposals aimed at increasing the
regional participation in the decisions and policies of the CG when they
affect shared competences.
 Strengthening regional fiscal autonomy: fiscal autonomy in VAT.

7. FISCAL AUTONOMY and COORDINATION: Experts
Committee Report: fiscal autonomy in VAT
CONCLUSIONS:
• Spain is one of the countries with the highest fiscal autonomy.
• There is an imbalanced allocation (between CG and AACC) of
mechanisms to get more resources.
• In special economical situations, AACC mainly relay on central
transfers.
GENERAL RECOMMENDATION:
INCREASE FISCAL AUTONOMY: TAXING POWERS IN VAT
Current situation:
50% of VAT collection  RG
VAT regulation  CG decision (necessary the same regulation within the country).

8. ALLOCATING TAXING POWERS IN VAT TO AACC
SPECIFIC RECOMMENDATION:
• Allow AACC to achieve an agreement asking the CG to approve
an increase/decrease of the VAT tax rates.
• The whole collection due to this increase/decrease would be
allocated to AACC.
With this mechanism:
AACC could apply CG to increase (or decrease) this rate in, for instance, 1 or 2 pts. (Margin
would be limited).
Example:
Now (general tax rate in Spain: 21%):
CG collection: 10,5% VAT tax incomes
RG collection: 10,5% VAT tax incomes
If AACC agree to increase tax rates in 1% (general tax rate: 22%):
CG collection: 10,5% VAT tax incomes
RG collection: 11,5% VAT tax incomes

9. ALLOCATING TAXING POWERS IN VAT TO AACC
SPECIFIC PROCEDURE:
 The EC Report does not specify the concrete procedure for this modification.
 Some points should be considered:
 The Financing System Law should detail the majorities (in terms of
population and regions), conditions, limits and requirements needed for the
modification.
 The AACC would reach an agreement in the Fiscal and Financial Policy
Council (FFPC) asking the CG to modify the VAT tax rate, specifying the
concrete increase (or decrease) applied in the VAT tax rate.
 CG should send the Law to the Federal Parliament, because this decision
should be implemented by means of a Federal Law, so the same regulation
in all the country would be guaranteed.
 Some extraordinary economic circumstances (previously established in the
Law) could allow the CG not to accept the regional proposal.