Dimecres  29.01.2014  13:23

Autor/s: CNA / Gaspar Pericay Coll

Catalan businesspeople annoyed with Spanish Government for not issuing fiscal balances

Finance Minister says old system was 'used improperly' to support Catalan independence claims


The Catalan business community is deeply annoyed with the Spanish Government for not publishing transparent data on Catalonia’s fiscal contribution to the rest of Spain and therefore not recognizing the fiscal deficit.

On Tuesday Catalonia’s main employers association—Foment del Treball—demanded 'maximum transparency' regarding the so-called fiscal balances, which calculates how much money Catalan citizens and companies pay each year to the Spanish Government in taxes and how much of this money comes back to Catalonia in the form of investments, infrastructures, and services.

Furthermore, on Monday, Luís Conde, President of Seeliger y Conde, stated in a radio interview that businesspeople were outraged that the government had not published the data and that it instead had changed the calculation method. On Saturday Conde organized a VIP lunch at his country estate for over 250 guests, including several Spanish and Catalan ministers, political leaders and some of Catalonia's largest employers. The closed-doors meeting with Catalonia’s main movers and shakers and Spanish authorities was held on the second day of the convention organized in Barcelona by the People’s Party (PP), which runs the Spanish Government.

The day before the lunch, the Spanish Finance Minister, Cristóbal Montoro, announced that the so-called fiscal balances would no longer be calculated and published in their present form. Montoro was supposed to issue them last December but their publication was delayed without explanations. Instead, in late January, he said he would publish the 'regionalized public figures' stating the costs of public services per citizen in March. This announcement caused great astonishment and frustration among Catalan politicians, businesspeople and academics, since there the question of how much Catalan taxpayers’ money is spent in the rest of Spain is a paramount issue. The change of criteria implies that the Spanish Government refused to publish this information in order to avoid fueling support for Catalan independence.

Previous studies have shown that Catalonia’s fiscal deficit represents an average of 8% of its GDP, which means that each year Catalans give away 43% of their taxes, some €16 billion per year. The Spanish Government only published this information once, in 2008 with data from 2005; it posted a fiscal deficit between 6.38% and 8.70% for Catalonia that year (depending on the calculation formula). Another study from the Catalan Government showed that an average of 8% of Catalonia’s GDP has been annually transferred to the rest of Spain between 1986 and 2010 using the money flow formula (which is the most-commonly used calculation). This means that Catalans have given 200% of Catalonia’s GDP to the rest of Spain in 25 years, an amount that nowadays represents some €400 billion. The annual budget of the Catalan Government, which is soley responsible for public healthcare, education and social policies,amounts to €29.31 billion for 2014; in 2012 it posted a deficit representing 2.21% of Catalonia’s GDP (some €4.4 billion).

The fiscal agreement proposed by the President of the Catalan Government, Artur Mas, to the Spanish Prime Minister Mariano Rajoy in September 2012 was aimed at addressing this issue. It guaranteed Catalonia’s solidarity with poorer territories but at the same time it included some limitations to ensure that Catalan public services were not under-budgeted compared to other parts of Spain. The proposal had been widely discussed in Catalonia among all the political parties, including the PP, and it was backed by most of the Catalan business community. At the time, it was also backed by some 80% of the Catalan population. Rajoy rejected the proposal out of hand and refused to even discuss it in further meetings. From that point forward, the Catalan President stopped publicly defending a new fiscal agreement and began to back demands for self-determination. A month ago, a majority of the Catalan Parliament groups led by Mas agreed on an exact date and the specific wording for the question to hold a self-determination vote in Catalonia.

Montoro criticized the fiscal balances but now says they are 'correct'

On Friday, the Spanish Finance Minister justified the decision to cancel the publication of the fiscal balances by saying they were 'incomplete and incoherent'. Montoro also criticized the Catalan Government for basing its claims on these figures. However, after hearing the reactions of the Catalan business community last weekend and on Monday, he changed his stance. On Tuesday, Montoro recognized that the fiscal balances are 'correct' and 'they are OK'. However he added they are 'wrongly used' to support Catalan independence claims. 'There are people who think that they need to become independent because of their territory's fiscal balance', he stated. According to him, the fiscal balances made it possible 'to give the citizens ideas' that were used to rile up 'spirit of confrontation' instead of 'a unifying vision'. 'Far from informing the debate, what they have brought is a confrontation', Montoro said on Tuesday. He insisted that 'territories do not pay taxes but citizens do' and for this reason he insisted on providing the 'regionalized public figures' in relation to the costs of public services. The aim is to offer 'new arguments' and to 'overcome the limitations of the current method', he added.

The Catalan Government accuses Montoro of 'censorship' and making a 'partisan use' of this information

On Tuesday, the Spokesperson of the Catalan Government, Francesc Homs, accused the Spanish Finance Minister of making a 'partisan use' of the information to calculate the fiscal balances between Catalonia and Spain. Homs said that the Spanish Government was 'censoring' this information as a 'retaliation' and to 'punish' Catalonia for the independence demands voiced by a large part of the society. The Catalan Government asked the Spanish Prime Minister, Mariano Rajoy, to correct the situation by publishing the fiscal balance figures. He pointed out that Rajoy had announced they would be published before the end of 2013. Homs added that changing the criteria and hiding these figures 'does not help to inform the debate' on the relationship between Catalonia and Spain.

On Friday evening, a few minutes after Montoro announced he would not be publishing the fiscal balances, the Catalan Finances Minister, Andreu Mas-Colell, asked the Spanish Government to publish the underlying data in order to enable other people to calculate the fiscal balances. 'Data is power, and we want transparency with the data,' Mas-Colell insisted. 'We want the data,' he demanded. Mas-Colell, who is a former Professor of Economics at Harvard and Berkeley, had suggested a few days ago that the fiscal balances should be calculated by independent international experts, in order to guarantee transparency and shed light on this crucial aspect regarding the relationship between Catalonia and Spain. On Friday, Mas-Colell said he was 'disappointed' about Montoro’s announcement. Furthermore, on Sunday, the Catalan President, Artur Mas, stated that not publishing this information is a way 'to cover up a problem that is a thorn in the side of' the Spanish Government. It is a way 'to cover up' the 'existing inequalities in Spain that impoverish the productive territories', he added.

Catalan employers request 'maximum transparency'

The main employer association in Catalonia, Foment del Treball, said it would be 'a good idea' to publish the fiscal balances with the traditional methodology. In a press release, Foment stated that the publication of regionalized public figures does not justify not publishing the other information. The Catalan employers association, chaired by Joaquim Gay de Montellà, added that the new calculation can complement the traditional methodologies and that both should be offered. Both systems 'can coexist with the objective of shedding greater light and offering better data, with the objective of helping make informed decisions based on objective figures'. Foment requested 'maximum transparency' from the Spanish Government.

A fairer fiscal plan for Catalonia is 'the best strategy' to recover from the economic crisis

Besides, the employers association added that solving the Spanish Government’s investment deficit in Catalonia and the insufficient funding of the Catalan Government to pay for public services 'is the best strategy for ensuring the competitiveness of the Catalan economy'. On Friday, while announcing that the fiscal deficit figures would not be published, Cristóbal Montoro also praised the Catalan economy for being Spain’s main engine and 'taking the country out of the [economic] crisis'. The day before Montoro’s speech it was announced that Catalonia is leading Spain’s unemployment reduction with a drop of 64,500 Catalan jobseekers while in the whole of Spain unemployment decreased by 69,100 people.