The speech by Marco Bolognini, Italian business lawyer in Spain, one of the founders of Maio Legal, a law firm with offices in Spain (Madrid, Seville and Vigo) and Mexico City, and columnist for the economic newspaper Expansion
Parlare di Spagna in late July, with the sultry heat and the sun, often means talking about the sea, islands and holidays, perhaps with a dreamy and hopeful look.
In this torrid summer 2019, however, the land of Cervantes has returned to the headlines as a term of comparison in Italy in the fiery debate on autonomy that ignites the souls of the combative regional governors and of those who, on the other hand, would have gladly avoided opening this battle front.
In fact, the Spanish territorial organization is quite distant from the Italian one and boasts greater levels of financial and managerial autonomy than other regional models in force in Europe. In fact, the State of the Autonomous Communities provides for a financing system strictly linked to the regional management of tax revenues.
Without going into excessive details and technicalities, we can say that the Autonomous Communities – at least those included in the so-called “common regime” – have full collection powers in relation to a series of taxes that have a significant impact (inheritances, donations, assets, etc. ) on the state budgets. The autonomous communities can further regulate to reduce (up to completely exclude them) or increase the rates proposed by Madrid. As regards VAT, Irpeg and Irpef, the Autonomous Communities manage the collection of 50% of the taxes.
Once all the various taxes have been collected, the Spanish regions must, however, surrender a significant part of the raked up to a common pocket managed by the central state which, through further distribution mechanisms, will use these revenues to try to balance the inevitable inequalities that exist between the different regions, while rewarding (with a further redistribution of what was obtained) the most virtuous autonomous communities.
This system – precisely defined as “common” – does not apply to the Basque Country and Navarre, adhering to the “foral” system, which boast absolutely independent methods of collection and management: they collect and keep 100% of the taxes produced by residents in the respective regions, and pay an annual “bill” to the central state for the services received (defense, foreign, etc.).
Why Spanish regions have such a high degree of autonomy
The answer is simple: because they manage a long series of services – even essential ones – for residents. Therefore, the autonomous communities must be able to count in order to guarantee citizens good health, a good education and – with a few less responsibilities – modern infrastructures.
The so-called “State of Autonomies” has worked to date. In particular, it has played an important role in propelling infrastructure projects and effectively managing public health. The proximity between decision-making power and entrepreneurs, the short chain (or even very short, in regions such as Rioja or Cantabria that do not reach 400,000 inhabitants) that binds the regional public administration and the productive fabric, makes the choices of politicians much more sensitive to the demands of those who create jobs and ultimately largely finance regional services.
Furthermore, the Autonomous Communities – thanks to the managerial autonomy of resources – have good areas of maneuver to be able to offer concrete support to local companies.
The positive effects of this territorial model become empirically evident when the scent of a possible, important investment from abroad arrives in Spain, especially if of an industrial nature: the Spanish regions concerned participate in a sort of unofficial “beauty contest” to attract – each to the detriment of the other regions – the investment in question. They show off their infrastructures, the good functioning of public services, the offer of industrial land, the controlled level of taxation.
If we then evaluate the situation of almost complete autonomy in Navarre and the Basque Country, we will see that there the level of per capita income is quite high, and the industrial fabric (even if recovering from the crisis) is solid and future-proof.
What has not worked, up to now, in the State of Autonomies
Probably the attribution to the regions of competences on education. In this context, the disruptive element with respect to national cohesion (see the Catalan case) was much stronger than any positive effect. In other words, we could close by saying yes to the State of Autonomies which allows direct investments and management in the area, but leave the school in Rome and Madrid.
