20.02.2014 - 09:54
Tributs de Catalunya [Catalan Revenue Service], the Catalan government’s new network of offices open to Catalan taxpayers, opens its doors today with an official presentation by President Artur Mas. This tool—’state structure’ in sovereigntist parlance—is the first step in the new model of the Catalan tax collecting administration. The goal is to collect all of the taxes paid by Catalan businesses, institutions, and individuals, even if the final destination for the revenues is not the Catalan government. The tax information and key to the cashbox are crucial for creating a Catalan state, but the network has its own rationale in the autonomic era as well.
The opening ceremony will take place this morning in the Torres Gracia Hall of the Generalitat Palace [seat of the Catalan Government]. Tributs de Catalunya is the product of the agreement signed on September 19, 2012 between the Agència Tributària de Catalunya [Catalonia Tax Agency, ATC] and the four Catalan “Diputacions” [Spanish State institutions that are part of the local administration]. The network will manage local taxes that were previously managed by the local ‘diputacions’ and also the taxes that correspond to and are managed by the Generalitat through the ATC. The inaugural ceremony will also include a demonstration of the website that connects the online portals of the organisms that exercise the application of taxes in Catalonia.
With the aim of understanding the goals, size, and limitations of the Catalan Revenue Service we offer you these eight questions and answers:
When it will start to work?
This year’s income tax declarations will be the first test facing the Catalan Revenue Service. Individuals generally present this declaration to the Spanish State Tax Administration Agency (AEAT) but the Generalitat will invite people to declare their income tax voluntarily through the Catalan agency in order to begin to collect Catalonia’s own data. The idea is that if the moment comes when the government has to assume 100% of the tax collection function, that the machinery will already be in place with the necessary information so that it will be able to take this step without undue risk. The law that accompanies the Generalitat’s budget for 2014 includes the ability of the ATC to ask for declarations from citizens and businesses, a measure designed specifically to allow for collecting as much tax information as possible. For that reason, the Catalan administration’s goal is to have the network working by this May.
Who can use the Catalan Revenue Service and what taxes will they be able to pay there?
Both individuals and businesses will be able to pay their taxes through the Catalan Revenue Service. The principal objective of the government’s strategy is to offer a single office that simplifies the payment of taxes. That’s the reason that the four ‘diputacions’ and municipal governments are on board. The agency can collect state taxes as well, which are the bulk of the taxes that have to be paid, as well as serve as a bridge to the state administration. Therefore, everyone who pays taxes in Catalonia—both individuals and businesses—can pay those taxes through the offices of the Catalan Revenue Service.
How many offices will the network have?
The ATC currently has four offices, one in each provincial capital—Barcelona, Lleida, Tarragona and Girona. The inauguration of the Catalan Revenue Service will mean opening fifty-three tax collection offices, which may be expanded to one hundred fifty during the coming months and years. One of the first logistical objectives of the entity is to have offices in all of the counties in order to facilitate payment by all individuals and businesses as much as possible. The Barcelona ‘Diputació’ will make twenty-one of its offices available to the Catalan Revenue Service, Lleida ten, Tarragona twenty-six and Girona eight.
What resources will be necessary to make the agency work?
Tax collection depends on two kinds of resources: first, a corps of employees that is proportional to the population size and second, software that has the capacity of managing all of the tax revenue information. With respect to the first point, the European Commission suggests that there be one thousand workers dedicated to tax collection for every million inhabitants. According to this recommendation, the optimal size for the Catalan Revenue Service would be around 7000—8000 employees. At the moment that this process of creating a Catalan revenue service is being begun, the Catalan administration has just over 1400 employees. The report that the National Transition Advisory Council (CATN) made regarding tax administration said that the agency would have 5000 employees at the moment that the Catalan State is created. The CATN was counting on automatically including the current employees of the Spanish agency to the new Catalan state structure.
What will the Catalan Government do with the money?
The Generalitat will serve as the go-between for those tax revenues that are not under its jurisdiction. That is, it will send the collected tax recepts to the corresponding administration in each case. The taxes that it currently collects will continue as before. With this strategy, the Generalitat has the possibility of gaining tax information from most of the economic transactions in Catalonia. Nevertheless, the success of the project will depend on the collaboration of the citizenry. For that reason, the Generalitat anticipates that this cooperation will become a significant act for those who participate.
How much money do they expect to collect?
At this time, the Generalitat collects about 2 billion euros each year. Most of those funds come from inheritance taxes, property transfer taxes, legal taxes, taxes on charitable contributions, and property taxes. The estimates that the CATN has made for potential tax collection of a future Catalan state is about 70 billion euros. In fact, depending on the level of taxes levied by the Catalan state, tax revenues could be anywhere between 40 and 100 billion euros. For the time being, the goal of the Catalan Tax Revenue’s first year in service—keeping in mind that the use of the agency to pay one’s taxes is strictly voluntary—is about 30 billion euros. That is the amount that would be necessary to finance a hypothetical Catalan state for the first few months, without help from the Spanish state.
For example, if we estimate 20% of the total gross revenues obtained by the Spanish agency, we’re talking about 40 to 50 billion euros. If the estimate is made based on Catalonia’s GDP, the result is 70 billion euros, based on the average Spanish tax rates of the last five years. If we estimate the revenues using the average tax rates in the European Union, revenues might go as high as 80 billion euros. And if Catalonia opted for a Scandinavian-type model, with very high taxes, the tax revenues could reach 100 billion euros annually.
Could this structure be used in a future independent State?
Clearly, this ‘state structure’ is important even if Catalonia does not become independent. That is, wanting to collect taxes is not a goal that is solely linked to the creation of an independent state. In any case, like all the so-called ‘state structures’, it responds to the desire for sovereignty and is an anticipatory step to achieving a state. If the moment comes for proclaiming independence, Catalonia will already have an experienced, data-rich tax collection agency at its disposal to keep risks to a minimum.
Can the Spanish State block the Catalan Revenue Service?
Spain cannot keep the Catalan Government from setting up the Catalan Revenue Service. Currently, the tax collection offices of the ACT already have the capacity to collect state taxes and transmit those monies to the state. Since the goal is not to keep the collected monies, it will not be infringing the law. The new tax collection structure of the Generalitat is part of a set of structures that already existed, through previous mechanisms, but with more strength and size than they had up to now. In practice, there is no new legal or procedural activity that could be considered an infraction of the law. The Spanish State has no legal recourse against it. It can, however, try to scare businesses and individuals in order to undermine the Generalitat’s strategy. But it can’t go any farther than making threats.
