14th Congress Plenary Session
30 May-1st June, Strasbourg (France)

Statement by Ramon Galindo Noriega, President of the Senate Commission for Municipal Development / 30 May 2007

Message before the Council of Europe

Mr. Chairman Ian Micallef

Members of the Local Authorities Chamber

Distinguished Colleagues

Ladies and gentlemen,

The reason why we are here today is because of our interest to promote public, social and private actions, to improve the level of life of the population.

We are here today, because we want new means four our people, in our respective countries, to increase their level of happiness.

We are here, searching and exploring new paths to devolvement.

Around us, there are different instruments towards that goal, some educational, some technological, some about health, some economic and others.

However, one of the most important instruments we have is the local community we are trying to help, and its local authority, because they have more interest in themselves than anyone else.

I am convinced, and there are many examples of the following, that in many countries we haven’t been able to empower the interest and creativity of local communities.

Some countries continue centralizing decisions about fundamental topics for development, like justice, education, economy and health, leaving local authorities only with basic and cosmetic responsibilities.

Ladies and gentlemen, the only way to development is the local communities and their authority, there is no other formula towards a better level of life to be applied somewhere else.

A nation of order and opportunities can only be built from the ground, with the responsible participation of its members, not only from their economic and political high levels, but from the source of power and initiative: people in their living space.

Some decisions can be better taken when taken by those with the main interest; therefore more power of decision must be given to the local authorities.

We know that here in Europe, like in other parts of the world, the subsidiarity principle is very intensively applied, in a manner that local governments and communities play an increasing role in the search of happiness and development.

This is not the case in many countries, and even though in Africa and Asia some efforts are being done about subsidiarity, there still are many regions where due to historic, cultural or political reasons, we find a strong resistance about decentralization.

The problem about centralism and concentration of responsibilities is that the application of public resources is not as efficient as it could be, and this is especially inconvenient where public resources are scarce.

It is not a coincidence, that the countries with higher level of life are the most decentralized ones, with strong local governments and with very participative local communities.

Competition in many ways, especially in productivity and economic activity, is an element of comparison, not between countries, but between cities. Brazil doesn’t compete with Germany, but Sao Paulo with Frankfurt; China doesn’t compete with Mexico, but Shanghai with Monterrey; the USA doesn’t compete with Japan, but Detroit with Tokyo; France does not compete with Spain, but Marseille with Sevilla… and in the end, the strength of countries, depends on the strength of their cities.

Therefore, what we are looking for, what we are searching for: level of happiness and level of peace, is mostly within the cities.  There it is the main challenge.

I know Mr. President, distinguished colleagues, that coming to Europe to talk about subsidiarity and reelection of local authorities, maybe doesn’t make sense, because those two political figures –subsidiarity and reelection- are very common and accepted, and have been applied in your countries for many years now, however, in other regions of the world, we are struggling to adapt them in our law to make democracy work not only in electoral terms.

Apart from Subsidiarity and Reelection, there is the factor of tax revenue for city governments, an element of governance that is not so common, and that it is being studied and analyzed in regions as the United Kingdom, the eastern Europeans countries and Japan, among others.

The debate is centered on the necessity of a relationship between the payment of taxes on income or consumption, and the revenue of the city government.

Generally, cities are allowed to tax citizens only on property, and still they depend mainly on grants and subsidies from the central government.  Subsidies and grants that are provided on two factors, population and poverty, and this creates a state of dependency, because the element of productivity is not considered for the distribution of central money among states and cities.

To depend on property tax, without having part on the income or sales tax, makes the city government and community to develop an agenda with no direct part on the economy of the city.

In other words, a city government with a budget not affected by the increase or decrease of the economic activity on the city, does not get involved on the matter because for revenue purposes the local economy does not make a difference, and sometimes even worse: the growth of the local economy only leaves more problems, migration, crime and demand of public services over the local officials and population.

Therefore, having local governments unrelated with the payment of income or consumption taxes is a mistake, especially because they are not accountable for the evolution of their own local economy. 

This makes the cities to become dependent sons and daughter, rather than partners.

We suggest that a proportion of the sales tax, which is the main economic indicator on the developing countries, generated on each city, goes directly to the city government budget. This measure will generate a direct involvement of the community and its government on the economic activity not only of the city but of the region.

This way, economic factors of growth, like employment, investment, consumption, tax payment and family income, would became responsibilities and functions of the city government, with an impact not only local but national.

Some countries have decided to create this relationship between local economy and local budget, throughout the revenue tax rather than the sales tax.  We believe that it is a good idea especially in developed countries, with an stable economy and high levels of income, but for developing countries we recommend this measure over the consumption tax.

Mexico is a country that is changing. We have a democracy now, and the following goal is to make democracy work in terms of quality of life.  We did not want to be a democracy only to be free to elect authorities, but to increase the population level of happiness.

Like other countries, Mexico is looking, is searching for new paths towards development.  We are taking our time because it is not an easy decision. However we are debating about changes on the tax policies, changes on the distribution of responsibilities among the different levels of government and people involvement, changes on the use of our resources...

We understand that we have to empower our local communities, because a strong, productive and just Mexico, can only be, with strong, productive and just city governments.

The Council of Europe, and in general the European Community, is interested on the promotion of democracy, quality of life and freedom all over the world.  For this purpose you support many countries with programs, consulting, grants and other measures.  I believe that we can learn from the European experience in our search for new paths toward a better future, and in this frame, I propose Mr. President Micallef, ladies and gentlemen, that a declaration could be issued during these meetings, recommending other countries the application of subsidiarity, reelection of local authorities and to divert a percentage of the sales tax towards the cities revenue.

Dear friends and colleagues, please accept a brotherly embrace from the government, the congress and the people of Mexico.