The current financing system starts determining the tax
capacity of each territory. It is
determined by the collection of taxes assigned to the Autonomous Communities
(AC). All calculations are done in
homogenous terms regarding the normative capacity in order to be able to
compare across AC.
Tax capacity, 2010
AC
|
EUR million
|
EUR per capita
|
index
|
ranking
|
Madrid
|
17.057
|
2.641
|
133,3
|
1
|
Balearic Islands
|
2.692
|
2.434
|
122,9
|
2
|
Catalonia
|
17.629
|
2.347
|
118,5
|
3
|
Aragon
|
3.062
|
2.273
|
114,8
|
4
|
Cantabria
|
1.337
|
2.258
|
114,0
|
5
|
Asturias
|
2.259
|
2.083
|
105,2
|
6
|
La Rioja
|
653
|
2.026
|
102,3
|
7
|
Castile and León
|
5.133
|
2.006
|
101,2
|
8
|
Valencia
|
9.511
|
1.861
|
93,9
|
9
|
Galicia
|
5.015
|
1.793
|
90,5
|
10
|
Castile-La Mancha
|
3.599
|
1.715
|
86,6
|
11
|
Murcia
|
2.433
|
1.664
|
84,0
|
12
|
Andalusia
|
13.428
|
1.604
|
81,0
|
13
|
Extremadura
|
1.675
|
1.513
|
76,4
|
14
|
Canary Islands
|
1.767
|
834
|
42,1
|
15
|
TOTAL
|
87.250
|
1.981
|
100
|
Catalonia is 18.5% above the Spanish average. It is the 3rd AC in tax generation
per capita after Madrid and the Balearic Islands.
Step 1: Guarantee Fund for
essential public services (GF)
This fund
aims to ensure uniform access to the basic services -namely health care,
education and social services- to all citizens regardless of their place of
residence. Each AC must have the same amount of resources making a similar
fiscal effort.
The
different sub-funds enclosed in GF are distributed based on the so-called “adjusted population” indicator[1], which accounts for the expenditure
needs from each AC.
Resources
for this fund:
§
Horizontal
fund: 75% of tax revenues assigned to the AC
§
Vertical
fund: additional transfer from the central government that is set to evolve in
line with the observed growth rate the Central Government's tax revenues[2].
Resources for each AC
after the Guarantee Fund
AC
|
GF allocation
EUR million
|
Resources
after GF
EUR million
|
EUR per
capita
|
index
|
ranking
|
Aragon
|
49
|
3.112
|
2.310
|
107,4
|
1
|
Castile and León
|
694
|
5.827
|
2.277
|
105,8
|
2
|
Balearic Islands
|
-190
|
2.502
|
2.262
|
105,1
|
3
|
Asturias
|
168
|
2.426
|
2.238
|
104,0
|
4
|
Catalonia
|
-911
|
16.717
|
2.225
|
103,5
|
5
|
Madrid
|
-2.700
|
14.358
|
2.223
|
103,3
|
6
|
Cantabria
|
-24
|
1.313
|
2.217
|
103,1
|
7
|
Galicia
|
1.153
|
6.168
|
2.205
|
102,5
|
8
|
La Rioja
|
52
|
705
|
2.187
|
101,7
|
9
|
Castile-La Mancha
|
958
|
4.557
|
2.172
|
101,0
|
10
|
Extremadura
|
680
|
2.354
|
2.126
|
98,9
|
11
|
Valencia
|
1.179
|
10.691
|
2.091
|
97,2
|
12
|
Murcia
|
543
|
2.976
|
2.036
|
94,6
|
13
|
Andalusia
|
3.541
|
16.969
|
2.027
|
94,2
|
14
|
Canary Islands
|
2.306
|
4.073
|
1.922
|
89,4
|
15
|
TOTAL
|
7.498
|
94.748
|
2.151
|
100
|
This partial levelling grant does
not modify the AC order set according to its initial tax capacity (fulfilling
the ordinality principle) but causes an intense cut in AC’s tax capacity
differences. At this point, Catalonia is only 3.5% above the Spanish average in
per capita terms.
Step
2: Global Sufficiency Fund (SF)
The main
goal of this fund is to guarantee the revised status quo, which are the resources from the previous system plus additional means that
include compensations for population growth and other adjustments.
It
increases the overall resources to the system and avoids that any AC loses
resources as regards the application of the previous system in effect until
2008.
Resources:
additional transfer from the Central that is set to evolve in line with the
observed growth rate the Central Government's tax revenues
Allocation:
Each AC obtains additional resources up to its revised status quo. The allocation is gauged as the difference between the
base year financing needs –previous system resources plus new system additional
contributions– and the revenue arising from its tax capacity plus transfers
from GF.
Resources
for each AC after the Sufficiency Fund
AC
|
SF allocation EUR million
|
Resources after SF
EUR million
|
EUR per
capita
|
index
|
ranking
|
Cantabria
|
393
|
1.705
|
2.880
|
129,0
|
1
|
La Rioja
|
171
|
876
|
2.719
|
121,8
|
2
|
Extremadura
|
580
|
2.934
|
2.650
|
118,7
|
3
|
Aragon
|
418
|
3.530
|
2.620
|
117,4
|
4
|
Castile and León
|
863
|
6.691
|
2.614
|
117,1
|
5
|
Asturias
|
299
|
2.726
|
2.514
|
112,6
|
6
|
Galicia
|
770
|
6.938
|
2.480
|
111,1
|
7
|
Castile-La Mancha
|
459
|
5.016
|
2.390
|
107,1
|
8
|
Catalonia
|
-152
|
16.565
|
2.205
|
98,8
|
9
|
Andalusia
|
1.081
|
18.049
|
2.156
|
96,6
|
10
|
Madrid
|
-436
|
13.922
|
2.156
|
96,6
|
11
|
Murcia
|
75
|
3.051
|
2.087
|
93,5
|
12
|
Canary Islands
|
140
|
4.213
|
1.989
|
89,1
|
13
|
Valencia
|
-597
|
10.094
|
1.975
|
88,5
|
14
|
Balearic Islands
|
-472
|
2.030
|
1.835
|
82,2
|
15
|
TOTAL
|
3.593
|
98.341
|
2.233
|
100
|
Note:
To be able to compare across AC, SF resources are adjusted
according
to specific powers assumed by certain ACs.
This grant
significantly alters the ranking of the AC in relation to their initial
position in tax capacity terms.
Catalonia
moves from the 3rd to the 9th position in the ranking and
falls to 1.2% below the Spanish average.
Unlike the
GF grant, SF is not set to evolve in line with adjusted population’s growth,
reversing the previous levelling mechanism over time and triggering a
significant loss of relative positions.
Step 3: Convergence Funds
It contains
2 funds, the Competitiveness Fund and the Cooperation Fund.
§ Competitiveness Fund: partially
compensates those AC with per capita funding (tax revenue + GF + SF) below the
average or below their fiscal capacity[3].
The resources are distributed among beneficiary AC according to their adjusted population. However, the total amount of allocated resources to each AC is capped.
The resources are distributed among beneficiary AC according to their adjusted population. However, the total amount of allocated resources to each AC is capped.
§ Cooperation Fund: resources are
devoted to those AC with a per capita GDP below 90% of the Spanish average or a
population density below 50% of the Spanish average or with low density’s
population keeping a population growth below 90% of the Spanish average.
The resources are allocated among beneficiary AC distributing the total endowment on 2/3 according to their per capita GDP and on 1/3 according to their population (regarding the one third sub-fund, no AC may receive more than 40% of this sub-fund).
Autonomous
Community
|
Cooperation
Fund
M€
|
Competitiveness
Fund
M€
|
Convergence
Fund
M€
|
Andalusia
|
500
|
0
|
500
|
Aragon
|
51
|
0
|
51
|
Asturias
|
145
|
0
|
145
|
Balearic Islands
|
0
|
559
|
559
|
Canary Islands
|
115
|
73
|
188
|
Cantabria
|
0
|
0
|
0
|
Castile and León
|
338
|
0
|
338
|
Castile-La Mancha
|
119
|
0
|
119
|
Catalonia
|
0
|
863
|
863
|
Extremadura
|
164
|
0
|
164
|
Galicia
|
380
|
0
|
380
|
La Rioja
|
12
|
0
|
12
|
Madrid
|
0
|
367
|
367
|
Murcia
|
80
|
62
|
142
|
Valencia
|
0
|
1.115
|
1.115
|
TOTAL
|
1.905
|
3.038
|
4.943
|
AC final resources
These final
resources compound the main available funds to Autonomous governments in order
to finance the responsibilities devolved to the AC. These resources are shown
according to specific powers assumed by certain ACs to be able to compare
across AC.
Autonomous
Community
|
M€
|
€/person
|
index
|
ranking
|
Cantabria
|
1.705
|
2.880
|
122,8
|
1
|
Extremadura
|
3.099
|
2.799
|
119,4
|
2
|
La
Rioja
|
889
|
2.757
|
117,6
|
3
|
Castile
and León
|
7.028
|
2.746
|
117,1
|
4
|
Aragon
|
3.581
|
2.658
|
113,4
|
5
|
Asturias
|
2.870
|
2.647
|
112,9
|
6
|
Galicia
|
7.318
|
2.616
|
111,6
|
7
|
Castile-La
Mancha
|
5.135
|
2.447
|
104,4
|
8
|
Balearic
Islands
|
2.589
|
2.341
|
99,8
|
9
|
Catalonia
|
17.428
|
2.320
|
98,9
|
10
|
Andalusia
|
18.549
|
2.216
|
94,5
|
11
|
Madrid
|
14.289
|
2.212
|
94,4
|
12
|
Valencia
|
11.209
|
2.193
|
93,5
|
13
|
Murcia
|
3.193
|
2.184
|
93,1
|
14
|
Canary
Islands
|
4.401
|
2.077
|
88,6
|
15
|
TOTAL
|
103.284
|
2.345
|
100
|
Finally,
the Convergence funds alter the final relative position placing Catalonia far
below from its initial position: Catalonia obtains resources 1.1% below the
Spanish average and ranks in the 10th position.
Final resources, real
terms (PPP-adjusted) index
Resources
are adjusted to reflect regional prices’ differences.
Autonomous
Community
|
index
|
ranking
|
Extremadura
|
137.5
|
1
|
Cantabria
|
127.2
|
2
|
Castile
and León
|
125.0
|
3
|
Aragon
|
118.3
|
4
|
Castile-La
Mancha
|
117.1
|
5
|
Galicia
|
115.1
|
6
|
Asturias
|
113.5
|
7
|
La
Rioja
|
108.4
|
8
|
Canary
Islands
|
104.0
|
9
|
Andalusia
|
97.9
|
10
|
Balearic
Islands
|
95.3
|
11
|
Murcia
|
94.3
|
12
|
Valencia
|
93.4
|
13
|
Catalonia
|
91.2
|
14
|
Madrid
|
90.7
|
15
|
Note:
These are computed using an index of relative consumer prices reported by FUNCAS
(Spanish savings Banks Foundation)
Catalonia
had the highest prices in 2010; 8.5% above the Spanish average.
In real
terms, Catalonia obtains resources 8.8% below the Spanish average and ranks in
the 14th position.
Evaluation
of the financing system
Catalonia is ranked 3rd in tax capacity; 18.5% above the Spanish
average. After the application of the whole financing system funds, Catalonia
obtains resources 1.1% below Spanish average and moves to the 10th
position. In real terms, these resources fall up to stand 8.8% below the
Spanish average and rank in the 14th position.
In nominal terms, Catalonia loses 7 positions and almost 20 percentage
points.
In real terms, Catalonia loses 11 positions and 27 percentage points.
The financing system does not accomplish with the ordinality principle and
it is highly arbitrary. Here are a few examples:
§ There are
8 AC that receive more resources than Catalonia despite having a lower tax
capacity (generating lower revenue in taxes).
§ There are
3 AC that have a tax capacity below the average that end up with resources
above the Spanish average.
§ There are
3 AC that gain resources from the system in the end despite being relatively
rich (above average).
§ There are
AC with similar initial tax capacity and significant different final resources.
Distribution of taxes
100% transferred taxes to
the AC
§ Inheritance and gift tax
§ Wealth tax
§ Property transfer and stamp duty
§ Gambling taxes
§ Tax on electricity
§ Special tax on certain means of
transport
§ Tax on hydrocarbon-oil retail sales
They
represent the 11.2% of non-financial revenues of Catalan government (2012
Budget).
Partially transferred
taxes to the AC
§ 50% of personal income tax
§ 50% of VAT
§ 58% of excise duties on hydrocarbons
§ 58% excise duty on manufactured production
of alcohol
§ 58% excise duty on manufactured
production of tobacco
They
represent the 63.1% of non-financial revenues of Catalan government (2012
Budget).
Read this article in French
Government of Catalonia
Ministry of Economy and Knowledge
Ministry of Economy and Knowledge
[1] This indicator is gauged as a weighted average
of seven variables: population (30%), area (1.8%), dispersion (0.6%),
insularity (0.6%), equivalent protected population (38%), population aged 65
years or above (8.5%) and population up to 16 years of age (20.5%).
[2] This growth rate only considers the evolution of
the Central Government’s tax revenue from the total revenue raised by the taxes
shared with AC.
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