Comparison of municipal income streams in Germany, England and Spain
The income structures for municipalities in Germany, England, and Spain are similar in some ways, but there are also some significant differences.
In Germany, municipalities have a relatively high degree of autonomy in terms of their own revenue-raising capabilities and rely mainly on three main sources of income:
- The property tax, also called "real estate tax" (Grundsteuer), which is a tax on the value of properties within the municipality and is the largest source of revenue for municipalities in Germany.
- The trade tax (Gewerbesteuer), which is a tax on business profits. It is a significant source of revenue for municipalities, but it varies depending on the economic activity in each municipality.
- The income tax (Einkommensteuer), which is a tax on personal income. However, the municipalities get only a small proportion of the total income tax collected, with the majority going to the state.
In England, the main sources of income for municipalities are:
- The council tax, which is a local tax based on the value of properties and paid by residents of the municipality. It is the main source of revenue for municipalities in England.
- The business rates, which are a tax on the value of commercial properties and paid by businesses. These rates are set by central government and municipalities receive a share of the revenues collected.
- Grants and subsidies from the national government, which are intended to support specific projects or programs.
In Spain, municipalities have a more limited autonomy, and their income structure depends largely on the decentralization process of each region, but generally the main income streams include:
- The property tax (Impuesto de Bienes Inmuebles), which is a tax on the value of properties within the municipality.
- The business tax (Impuesto sobre actividades económicas), which is a tax on business profits.
- The national government grants and subsidies for specific projects or activities.
- In summary, the main income streams for municipalities in Germany are mainly property tax, trade tax and a small proportion of income tax, in England, the council tax and business rates are the main sources of income, and in Spain, municipalities rely mainly on the property tax, business tax, and grants and subsidies from the national government. However, it's important to mention that income structure vary between municipalities and regions, and other income streams can be present as well.