Article 137 of the Constitution states that the Spanish public sector is territorially organized into municipalities, provinces (with these two constituting local government), the autonomous communities, and the state. Through the Diputaciones Provinciales, the primary task of the provinces is to provide technical assistance to municipalities and coordinate the provision of local public services in their jurisdictions. All these entities enjoy autonomy in the management of their respective interests. In 2004, following the full devolution of health care expenditure, the central government is estimated to have accounted for less than 30 percent of general government expenditure (excluding social security), autonomous communities for slightly over 50 percent, and local governments for the remaining 20 percent. At present, there are 17 CCAA and 8,100 municipalities, 80 percent of which have a population below 20,000 inhabitants.
As an example, in 2004 EUROSTAT ruled that Spanish Radio and Television (Radio y Television Espanola, RTVE), the public TV and radio station, should be included as part of the general government (see paragraph 6).
These include the Railway Infrastructure Management Enterprise (the previously called Gestor de Infraestructuras Ferroviarias, GIF, which has been renamed the Administrator for Railroad Infrastructure, Administrador de Infraestructuras Ferroviarias (ADIF) after absorbing the RENFE investment operations), State Companies for Water Works (Sociedades Estatales de Agua), Land Management Companies (Sociedades de Gestión Inmobiliaria), Irrigation Modernizatión and Construction Companies (Sociedades de Modernizacion y Construcción de Regadios), the Public Railway Entity (RENFE), Spanish Airports and Air Navigation (Aeropuertos Españoles y Navegación Aéréa, AENA), and Ports of the State (Puertos del Estado).
For instance, the public entity of the autonomous community of Madrid for building and managing transportation, (MINTRA, Transport Infrastructures of Madrid) was originally classified as part of the general government. In 2001, the autonomous community of Madrid submitted to EUROSTAT evidence of MINTRA’s prospects for yielding a positive rate of return. Subsequently, EUROSTAT allowed a reclassification of MINTRA as part of the public enterprise sector.
See Ley 5/1995 on the Legal Regime of the Sale of Public Stakes in Certain Enterprises and subsequent legislation in 2003.
For instance, in Repsol (oil), they expire end-2006; in Telefonica (the telephone company), end-2007; and Endesa (electricity), end-2008. Based on legislation enacted in January 2004, investors are now able to acquire more than 10 percent of the shares in Telefonica, Endesa, Indra (information technology and defense), and Iberia (airlines) without the government’s authorization.
The enterprises covered included RTVE, GIF (renamed ADIF since January 2005), the State Waterworks Companies, AENA, two mining companies (HUNOSA and the Mining Company of Almaden and Arrayanes, Minas de Almadén y Arrayanes, MAYASA), and the shipbuilding company IZAR.
The dominant position of Telefonica in the provision of this universal service may more than compensate for its costs in fulfilling this obligation.
Defined as transportation and water infrastructure that crosses through more than one region, ports, and airports.
Defined as railways and highways which run completely in the territory of the region and within the sameboundaries carried out by these means or by cable, ports of refuge, recreational ports, airports, and other means inits own territory.
Legislative Royal Decree 2/2004 on the Compiled Text of the Law Regulating Local Finances (Texto Refundidode la Ley Reguladora de las Haciendas Locales).
In particular, the law states that municipalities with a population over 5,000 inhabitants must provide publicparks, a library, a market place, and waste processing; municipalities with a population over 20,000 inhabitantsshall also provide social services, firefighting, sports facilities, and slaughterhouses; and municipalities with apopulation over 50,000 inhabitants must also provide urban public transportation and environment protection.
The Constitution does not establish a clear and precise model for the allocation of the state’s revenues amonglevels of governments. The Constitution allows for tax-sharing and transfers from the central government.
CCAA long-term debt must be used for capital expenditure; the debt burden, defined as the sum of interest payments plus long-term debt redemption, must not exceed 25 percent of current revenue; and the issuance of foreign currency-denominated debt must be authorized by the state. The state’s authorization is conditional on the CCAA’s compliance with the BSLs. The laws do not clearly establish who has the authority to verify the CCAA’s compliance with borrowing constraints, and—until September 2004, when summary data on fiscal balance outcomes for 2003 was published—no information is published on such compliance.
In its first year of operation (2003), however, 11 of 17 regions had budget deficits, albeit in many cases quitesmall.
Legally, the FFPC is an advisory body; in practice, it has become a decision-making body on all aspects of CCAA financing. The vote of the regional Finance Councilors of the 17 CCAA (combined) and the ministry offinance and ministry of public administration (combined) have the same weight.
See Law 21/2001 on the Regulation of the Fiscal and Administrative Norms of the New Financing Arrangements with Regions of the Common Regime and Autonomous Towns of Ceuta and Melilla.
In particular, large municipalities receive 1.6875 percent of the personal income tax, 1.7897 percent of the VAT, and 2.0454 percent of excises collected in their jurisdictions. For provinces, the respective percentages are 0.9936, 1.0538, and 1.2044.
By law, municipalities are entitled to receive up to 15 percent of the capital gains generated by zoningoperations (e.g., the reclassification of rural land as urban land). These resources must be earmarked for capitalexpenditures. In some cases, the private investor benefiting from this change in zoning status is requested toprovide land, rather than cash, as payment. In these cases, the fiscal accounts of the municipality do not recordthese transfers of land as revenue.
Fund for Development Assistance (Fondo de Ayuda al Desarrollo), Fund for External Investment (Fondo parala Inversión en el Exterior), Fund for External Investment of Small- and Medium-Sized Enterprises (Fondo para Operaciones de Inversion en el Exterior de la Pequeña y Mediana Empresa), and funds for microcredit(microcreditos).
According to Legislative Royal Decree 2/2004 for the compiled text of the Regulatory Law of Local Entities, there are two kinds of municipal taxes. First, taxes that municipalities must levy on their jurisdictions, such as the tax on buildings, the tax on economic activities, and the tax on vehicles. Second, taxes that municipalities may levy in their jurisdictions, such as the tax on construction, works, and facilities, and the tax on the increase in the value of urban land.
As an example, the 2003 state budget included compensation to municipalities on account of the exemption of small business from the tax on economic activities.
From 1993 to 2004, tax changes underlying budgeted revenues were made through the so-called ley de medidas that usually accompanied the annual budget. This law did not present a detailed description of the tax changes it included, leading to some ambiguity regarding the tax system. These changes in taxation were also not subject to the usual process of consultation with civil society and the calendar of discussion with parliament. This practice has been interrupted in 2005 with the enactment of separate laws for the tax changes included in the budget.
In 2003, the AEAT published 19,885,000 booklets, sent 32,616,773 pieces of personal correspondence, and answered 7,212,250 phone calls.
These entities include: the Superior Management Council (Consejo Superior de Directión), which is anadvisory body, the Joint Commission for Tax Administration (Comisión Mixta para la Gestión Tributaria), whichproposes tax administration improvements to the AEAT, and the Territorial Councils on Tax Collections(Consejos Territoriales de Dirección), which prepare technical analysis for the Joint Commission.
Article 103 of the Constitution states that the law shall regulate the civil service, in particular with regard torecruitment for the civil service on the basis of merit and ability; civil servants’ rights to form unions; conflicts ofinterest; and the safeguards for political impartiality in the exercise of their functions.
For an overview of budget documentation in Spain and the differences between the different budget documents (the red, green, yellow, and grey series), see the MOEF’s Presupuestos Generales del Estado 2005: Introduction y Estructuras Presupuestarias. This is referred to as the Libro Azul and is available athttp://www.igae.minhac.es/presup/LibroAzul05/LibroAzul05.htm.
See, for example, Report on Tax Administration (Memoria de la Administration Tributaria) (latest version is 2002); Annual Report on Tax Collections (Informe Annual de Recaudación Tributaria, 2003); Taxation and Statistics on the Spanish Tax System (Recaudación y Estadisticas del Sistema Tributario Español 1991-2001), and the Annual Report on the Activities of the AEAT (last version is 2003). AEAT’s Annual Report on Tax Administration is especially useful, as it provides information on actual collections relative to projections, volume and kind of assistance provided to taxpayers, and actions taken to improve tax compliance. The AEAT does not publish estimates of the compliance cost of proposed tax measures.
The FTC indicates that best practice involves dissemination of data on the outturns of the two preceding fiscal years, together with forecasts of the main budget aggregates for two years following the budget.
The stock of these guarantees to public enterprises—which comprise the bulk of these guarantees—is modest (0.9 percent of GDP as of end-2003).
Cataluña will also be providing this information from 2004 onward.
Some ex-post analysis of PPPs is undertaken, as the ministry of public works audits compliance with contracts involving state toll road concessions.
Law 41/1994 on the state budget.
For instance, the cost of Telefonica’s below-market prices in 2004 is projected at € 110 million and is clearlydisclosed on the National Commission for the Telecommunication Market’s website (www.cmt.es). As indicatedin footnote 6, the dominant position of the company may provide adequate compensation for these costs. Thecosts to electricity enterprises of their QFAs (see paragraph 7) are clearly reflected in consumers’ electricity bills(see the website of the National Commission for Energy at www.cne.es).
See the IMF’s Dissemination Standards Bulletin Board at http://dsbb.imf.org/Applications/web/dsbbhome/.
See "Reporting of Government Deficit and Debt," Council Regulation (EC) No. 3605/93 as amended by Council Regulation (EC) No. 475/00.
Using an economic classification, spending is disaggregated by chapter, article, concept, and subconcept.
See Article 167 of Legislative Royal Decree 2/2004 on the Compiled Text of the Law Regulating Local Finances (Texto Refundido de la Reguladora de las Haciendas Locales).
The 2005 budget, however, does provide a qualitative assessment of potential future risks arising from certain public enterprises (see paragraph 6).
The 2005 annual budget law extends the deadline for the final approval of the stability targets to June. This provision will be applied for the first time in the elaboration of the 2006 budget.
The explanation of the deviations between budget forecasts and actual outcomes included in yellow book for the Presentation of the 2005 Draft Budget of the State (Presentación del Proyecto de Presupuestos Generales del Estado para el 2005) represents a welcome first step, but it only pertains to revenue and only covers the state.
Article 136.1. The COA is regulated by Organic Law 2/1982, of May 12, of the COA and in Law 7/1988, of April 5, on the Operation of the COA.
This autonomy from the executive branch is somewhat weakened by the fact that an attorney appointed by thegeneral attorney participates in the collective decision-making body, with voice and vote.
These OCEX are usually referred to as Sindicaturas de Cuentas or Camaras de Cuentas. A welcome step has been the agreement reached within the Delegated Commission for Economic Affairs (Comision Delegadapara Asuntos Economicos) on January 13, 2005, establishing the obligation of all ministries to publish, in an electronic format, all the economic and financial data they produce, according to specific calendars, as well as all information related to methodologies used to produce the data.
A welcome step has been the agreement reached within the Delegated Commission for Economic Affairs (Comisión Delegada para Asuntos Económicos) on January 13, 2005, establishing the obligation of all ministries to publish, in an electronic format, all the economic and financial data they produce, according to specific calendars, as well as all information related to methodologies used to produce the data.