Urban sprawl and local fiscal burden: analysing the Spanish case

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 Spanish governments. The high variability of the characteristics of Spanish urban areas as well as the existence of very similar local fiscal structures made this case particularly interesting. A precise index of urban sprawl, calculated with geo-referenced digital cartography, was used. Utilising spatially desegregated information of taxes from the Spanish National Institute for Fiscal Studies allowed for a measure of fiscal burden by local areas and the ability to distinguish among types of taxes. Control variables were also available at the local level from the Spanish Census and other databases. Quantile Regressions methodology supplementing Ordinary Least Square regressions assessed the discrepancy in the results and in the conclusions of the studied distributions. The results indicate that higher levels of urban sprawl imply higher local fiscal burden. This is especially clear in the higher part of the local fiscal burden distribution. By tax categories, the phenomenon of urban sprawl particularly affects local indirect taxation. Based on these results, local decision-makers should consider that urban planning is also a fundamental tool to assure long-term local fiscal stability