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Urban sprawl and local fiscal burden: analysing the Spanish case

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Abstract

Urban sprawl is rapidly occurring in many Spanish urban areas. The objective of this paper is to evaluate how the trend of building dispersion of new residential areas may be affecting the fiscal stability of local governments in Spain. The wide diversity of the characteristics of Spanish urban areas as well as the existence of very similar local fiscal structures make this case particularly interesting. After delimiting the urban areas and the spatial unit of analysis, a precise index of urban sprawl, calculated with geo-referenced digital cartography, is used. Using the spatially disaggregated information of taxes from the Spanish National Institute for Fiscal Studies allows for a measure of fiscal burden by local areas and the ability to distinguish among types of taxes. Control variables are also available at the local level from the Spanish Census and other databases. Two methods, quantile regressions and ordinary least squares, are used in order to measure not only the average change but the heterogeneity across the distribution of the local fiscal burden associated with the changes in urban sprawl, whilst controlling for other explanatory variables in the model. The results indicate that higher levels of urban sprawl imply higher local fiscal burden. By tax categories, the phenomenon of urban sprawl particularly affects both local indirect and direct taxation. These results suggest that local decision-makers should consider urban planning as one of the fundamental tools to assure long-term local fiscal sustainability.

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Notes

  1. According to the Regional Authority Index on the basis of data for 2005, Spain is in the sixth position after Germany, Belgium, the United States, Canada, and Italy (Hooghe et al. 2010). This index is measured across eight dimensions: institutional depth, policy scope, fiscal autonomy, representation, law making, executive control, fiscal control, and constitutional reform.

  2. For example, the Tax on buildings, facilities and works -according to data from the Ministry of Finance and Public Administration—provided 2637.8 million euros to municipalities in 2006 but only 482.2 million euros in 2014.

  3. Catalan et al. (2008) and Muñoz (2003) develop an urban sprawl analysis for the Mediterranean coast. García-Lopez (2012) analyzes the specific case of Barcelona and, Moliní and Salgado (2012) and also Rubiera et al. (2017), the case of Madrid.

  4. As an example, see the case of Asturias studied in González et al. (2013).

  5. Excluding the autonomous cities of Ceuta and Melilla that present a particular fiscal system.

  6. See Fig. 1 for the map of the Spanish municipal structure and the real urban extensions over the municipal borders.

  7. This author criticizes the mere use of “number of inhabitants” (population) in the definition of fiscal burden. She suggests the inclusion of socio-economic variables in order to be more accurate with the analysis of local fiscal burden.

  8. It would have been desirable to subtract, from chapter III, the share of revenues corresponding to the urban activity, but there is no available data, since we only have the information aggregated by chapters. Nonetheless, at the aggregate level, we have calculated that the revenues associated with urbanistic activities in chapter III for 2011 represented 2.19% from the total of non-financial revenues (MFPA 2013).

  9. We include the branches of service activities such as accounting and legal services, architecture, audio-visual, engineering, software, advertising, research and development (R&D), or health and education services.

  10. The variable CAPITAL is significant at 1.3% level. Despite it must be considered significant at the level of 5% (**), according to the branches established, it is closer to the significance at 1% level (***).

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Acknowledgements

We would like to thank the editor Peter Huber, and two anonymous referees for their helpful comments and suggestions. The first author, as a visiting scholar in the IRPET, would like to express her very great appreciation to Patrizia Lattarulo and also Claudia Ferretti for their valuable and constructive suggestions during the second review of this research work.

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Authors and Affiliations

  1. Department of Economics, C+D Jean Monnet Group & RIFDE, Faculty of Economics and Business, University of A Coruna, Campus de Elviña s/n, 15071, A Coruna, Spain

    Laura Varela-Candamio

  2. REGIOlab, Regional Economics Laboratory, University of Oviedo, Avda. De El Cristo s/n, 33006, Oviedo, Spain

    Fernando Rubiera Morollón

  3. International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University, 14 Marietta Street, Atlanta, GA, 30303, USA

    Gohar Sedrakyan

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  1. Laura Varela-Candamio
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  2. Fernando Rubiera Morollón
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Correspondence to Laura Varela-Candamio.

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Varela-Candamio, L., Rubiera Morollón, F. & Sedrakyan, G. Urban sprawl and local fiscal burden: analysing the Spanish case. Empirica 46, 177–203 (2019). https://doi.org/10.1007/s10663-018-9421-y

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