Instalación y Configuración de OpenAM

1.3.1. Overall degree of decentralisation

This Section discusses fiscal decentralisation in the EU from the revenue side. First, it considers the overall degree of revenue decentralisation and the extent to which the broadening of subnational governments' competences (and corresponding expenditure responsibilities) are matched with

corresponding financial means. Second, it

discusses the composition of subnational

governments' revenues, by focusing on the relative weight of two main sources, i.e. taxes and transfers.

The degree of government revenue decentralisation can be measured by the share of subnational government revenues in revenues of the general government. These are defined as revenues collected by or transferred to subnational

governments. (145) Table IV.1.4 presents these

figures for EU Member States. The format is the same as for Table IV.1.1, which presented the share of subnational government expenditures; in both cases the levels as a percentage of the overall general government total and GDP are given for 1995, 2007 and 2010, alongside the percentage point changes between 1995 and 2007 and between 2007 and 2010 in order to single out the impact of the recent economic crisis. The figures for 2010 are also displayed in Graph IV.1.6 to ease cross-country comparisons.

As shown in the Graph, in 2010 DK had the highest revenue decentralisation in the EU with around two thirds of total government revenues being raised by or assigned to subnational

(145_{) The Chapter differs here from a number of papers (e.g.} Escolano et al., 2012 and Eyraud and Lusinyan, 2011) where revenue decentralisation is defined as the share of subnational own revenues (taxes and fees) in general government revenues, thereby excluding transfers. This is done as the current focus is on the whole set of subnational revenues and on their composition across different sources (taxes, transfers and fees), see below. In chapter IV.3 the indicator of own revenue decentralisation, distinct from the above indicator (i.e. excluding transfers), is introduced and used in the analysis.

governments. ES and SE had subnational percentages close to 50%, whereas FI, BE, DE, PL, NL, UK, LT, IT, AT and LV had percentages in excess of 30%. On the other hand, subnational revenues make up less than 5% of total government revenues in MT, EL and CY and under 20% in LU, PT and SK. Subnational revenues account for 37% of GDP in DK, between 20 and 25% in SE and FI, between 15 and 20% in BE, ES, DE, NL, AT and IT. The share of subnational governments in total public revenues has increased in the 1995-2010 period in the majority of Member States (17 out of 27). The

increase has been particularly pronounced

exceeding 10 percentage points in RO, PL, LV, ES and SK, whereas DK and LT have seen increases of just below that amount (fully concentrated in the crisis years). Conversely, reductions of over 10 percentage points have occurred in IE and NL, in both cases concentrated in the pre-crisis period.

1.3.2. Break-down of subnational

governments' revenues: tax vs. transfers

In terms of composition of revenues, subnational levels of government rely on two main sources – taxes (which can either be set at subnational level or assigned from the central government) and transfers from the central government. Other sources, which are much less important in quantitative terms, include fees paid by service Graph IV.1.6: Subnational government revenues (% of general government revenues - 2010)

0 10 20 30 40 50 60 70 DK ES SE FI DE BE PL NL UK EU27 LT IT AT LV CZ RO HU EE FR SI BG IE SK PT LU EL CY MT S u b n at io n al g o v er n m en t re v en u e to g en er al g o v er n m en t re v en u e (%) State governments Local governments

Graph IV.1.8: Decomposition of tax revenues of subnational governments (2010) 0 10 20 30 40 50 60 70 80 90 100 IE EL HU AT RO PT IT CY BE BG NL CZ EU27 ES FR PL DE SK SI LT LV DK LU SE EE FI UK MT P erc en tag e o f to tal tax re v en u e o f su b n ati o n al g o v en m en t

Taxes on production and imports - Value added type taxes (VAT)

Taxes on production and imports - Taxes on products, except VAT and import taxes Taxes on production and imports - Other taxes on production

Current taxes on income, wealth, etc - Taxes on income Current taxes on income, wealth, etc - Other current taxes Capital taxes

Source:Commission services.

users and property income. The use of borrowing by subnational governments is covered in Section 1.5 below. Graph IV.1.7 above shows the break- down of total revenues of subnational governments by four main sources; taxes, transfers, sales (essentially fees or charges on services provided)

and other revenues (including property income, other subsidies etc.) in 2010.

These figures suggest that on average subnational governments across the EU rely slightly more on transfers than on taxes as their main source of Graph IV.1.7: Sources of subnational government revenue (2010)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SE DE AT LV FI ES EE SK CZ SI IT FR DK PT LU EU27 PL LT CY BE HU IE UK RO BG NL EL MT % o f su b n ati o n al g o v ern m en t re v en u e (2 0 1 0 )

Taxes Sales Transfers Other revenues (including property income, social contributions, other subsidies on production)

financing. Taxes account for 50% or more of total subnational government revenues in SE, DE, AT and LV, and for between 40 and 50% in FI, ES, EE, SK, CZ, SI and IT. At the opposite end of the spectrum, subnational governments receive no income from taxes in MT, whereas they receive less than 10% of their income from taxes in EL, NL and BG and between 10 and 20% in RO, UK, IE, HU and BE. Transfers make up more than half of subnational government revenues in 14 countries (PL, LT, CY, BE, HU, IE, UK, RO, BG, NL, EL, MT, DK and IT). Finally, fees and charges generally account for a much lower share than taxes and transfers, with subnational governments in LU, CY, FI and EL receiving the greatest percentage of their income from these sources amongst EU Member States at or over 20%.

Graph IV.1.8 above shows the break-down of tax

revenues of subnational governments by type of tax (income tax, property tax, VAT etc.) in 2010 for all EU Member States. It allows to highlight cross-country differences with respect to the predominant type of tax which is assigned to subnational governments. Taxes on income and wealth account for 70% or more of total tax revenues in 13 countries, including some of the more decentralised such as SE, FI, DK and DE, as well as the UK, LU, EE, LV, LT, SK, SI, PL and FR. Within this group of countries, this share is almost entirely accounted by income taxes alone (both personal and corporate) with the exception of UK and FR where wealth taxes (including property taxes) make up all or most tax revenues of subnational governments.

Wealth and property taxes are an important source also in FI, NL, BG, CY and RO. On the other hand, taxes on production and imports are predominant in 11 MS (IE, EL, HU, AT, RO, PT, IT, CY, BE, BG and NL), albeit not including VAT, except in AT and PT. In CZ and ES the weight of production taxes and of income/wealth taxes is quantitatively similar, with a significant role for VAT. Taxes on capital are generally not assigned to subnational governments except in BG, ES and, to a lesser extent, BE and DE.