The Madrid City Council will include proposals for an alternative financing system within the framework of the proposal to reform the Madrid Capital and Special Regime Law (Lcrem), whose draft is “practically completed” and which will seek to improve the legislation that recognizes the singularity of the capital.
The City Council created an express commission in October 2023 which has been working on the draft law reform since then and is made up of the mayor of Madrid, José Luis Martínez-Almeida, members of the municipality, staff from the legal department and experts appointed by the mayor, including university professors and lawyers.
At the time of the creation of this body, the Official Gazette of the Madrid City Council (BOAM) already indicated that “the purpose and functions” of the commission involve the development of “proposals to amend the Lcrem which allow the consolidation and updating of the legal, organizational and financial regime and powers provided for by said law” intervening in various areas, in particular “financing and budgetary management”.
The same text specified that the commission’s objective was to “a work of analysis of the different possibilities of modification of the Lcrem in development of the principles of local autonomy, subsidiarity, differentiation and financial sufficiency”.
Arguments
In June, during the review of the first year of his government, Almeida announced that these experts had “finished” their work and that the project they were working on would allow “adapt the regulatory and fiscal framework of the city of Madrid to the demands of a large city of the 21st century”.
In the opinion of the Consistory, the arguments in favour of the reform are based on the fact that the current Lcrem “suffers from several deficiencies due both to the lack of adaptation to the state legislation approved since then and to the non-inclusion in the text of the law of some important regulationssuch as those relating to the financial regime”.
Furthermore, the municipal executive considers that “the evolution of the economic and social structure of Madrid as the capital of the State” requires that the city have the “the tools needed to cope with the management of an increasingly changing and innovative environment”.
New taxes
The reform would allow the city to include new taxes justified by its particular capital situationFor example, a tourist tax that takes into account the number of visitors who go to Madrid rather than to other cities. However, the municipal government has already rejected this possibility in the June plenary session and the delegate of the Area of Economy, Innovation and Finance has maintained that the policy of the Council is to “maintain balanced taxes” that “allow to finance public services in addition to job creation and economic growth.
It is also possible that Madrid has alternative tools to those available in other cities.. Currently, the singularities that Madrid had under the aegis of this law were the possibility of having its own tax agency, although this possibility is also included in the Regulatory Law of the Bases of the Local Regime. On the other hand, the capital is under the regime of “registration closes” although this ceased to be exceptional in 2013 as it was established for all municipalities.
The first step in the approval process is the preparation of the reform project, which It will have to be approved by the Board of Directors of the Madrid City Council.be submitted to the plenary and then to the Congress of Deputies for approval and subsequent ratification in the Senate.
