Gov Accountability

Spanish city to keep following Fundalib‘s advice

La Laguna
Juan Pina

Juan Pina | Secretary General, Fundación para el Avance de la Libertad

2020 Europe Liberty Award winner, Fundación para el Avance de la Libertad (Fundalib), continues to see city-governments in Spain heed the warnings of their Índice de Libertad Económica de las Ciudades Españolas (Index on the Economic Freedom of Spain’s Cities). The index examines municipal data that impacts the economic freedom of cities throughout Spain and makes recommendations that will strengthen local economies.

Fundalib’s Juan Pina highlights an exciting update regarding the index and discusses how his organization’s recommended policies are making a difference on the beautiful island-city of La Laguna.

The Canary Islands city of La Laguna, part of the larger urban area of Tenerife's capital, Santa Cruz, had a population of 155,549 inhabitants as of 2018. This makes La Laguna the 41st largest city in Spain and thus one of the local councils analyzed by the annual Index of Economic Freedom for Spain's Cities (ILECE, for its Spanish initials). This project carried out by Atlas Network partner Fundalib, Spain's Foundation for the Advancement of Liberty, was the winner of the 2020 Europe Liberty Award.

The first edition of this index was published in 2018. In 2019, the mayor of La Laguna, Luis Yeray, paid a lot of attention to what Fundalib had to say on his city. Number three in the city's government is Mr. Alejandro Marrero, Lieutenant Mayor in charge of Taxation, Economy and Security. While they both belong to the Socialist Party, Spain's social-democrats, they nevertheless understood that La Laguna's position in the index was detrimental to its economy, development and employment. The city was ranking twenty-third and, with a 52.11 score in the 0-100 scale, it barely passed the test to be labeled as having "acceptable economic freedom". They decided to take action and improve the city's position on ILECE by following Fundalib's general recommendations to all cities, plus the one specific to them: La Laguna needed to improve its city government's cost per inhabitant and its attraction of companies willing to settle in its territory.

This year, the third edition of ILECE showed a substantial improvement in La Laguna's economic freedom. It grew 3.34 points in score, thus achieving the 10th position in the ranking. Last month, the city government's official online portal carried a story headlined "La Laguna reaches the upper part of the ranking of investment-friendly cities". Lieutenant Mayor Marrero stated that "the city has undertaken great efforts to reduce the tax burden on both citizens and companies and to ease business activity. One year after our previous score, we acknowledge the measures we have applied to reduce and flex various taxes, especially during the current pandemic, so that people may face their daily lives with more money in their pockets".

Mr. Marrero went on to say that "while our ranking in last year's index was acceptable, we were recommended to improve our city government's cost per inhabitant and our ability to attract businesses. Thanks to the work so far carried out, we have been able to go up in this index, and according to the publishing organization [the Foundation] this translates into higher prosperity for our city, with more freedom to work, consume and invest. We hope to maintain or even improve this position next year, because during the second half of 2020 we have started several lines of action with a greater weight, which follow the Foundation's recommendations", he added. These actions include a tax cut on the Real Estate Tax for both households and businesses until the end of 2023, a tax exemption for households using solar energy and an exemption on taxes to restaurants and similar businesses for their tables and chairs on the street.

Fundalib, is of course very glad to see that La Laguna has followed and plans to keep following its recommendations. We plan to publish the fourth edition of ILECE by the start of the second quarter of 2021. We are particularly happy to see that even the left-wing local government of the third-largest city in the Canary Islands is now leaning towards more economic freedom and actively reforms its own policies to increase its chances to top our ranking. The Foundation will keep working with all policymakers irrespective of their ideological backgrounds.