Catalonia is ranked third for the amount it pays in taxes, but is ranked tenth for the amount it receives in return

The 2010 fiscal year end statement shows that the current system perpetuates the fiscal deficit.

Catalonia is the third community with the highest level of solidarity in Spain, or said differently, the third to pay the most, but when it comes time to distribute autonomous financing it sits in tenth place for resources received. The fiscal year end statement of 2010 clearly shows that Catalonia pays more than the average and receives below the average, and that the current system of autonomous financing, “the best in history,” as the Catalan tri-party coalition government had called it when they signed it into law, is perpetuating Catalonia’s fiscal deficit with Spain.

The calculations that the technicians from the Department of Economy put together based on the tax statement the Tax ministry made reveals that, by fixing the Spanish average per capita at 100, the Catalans paid an average of 118.5 and received 98.9 in autonomous financing. It is important to remember that the autonomous resources are those preferentially aimed at social spending and essential public services.

These data are politically significant because the new financing system of 2009 had been heralded as a great success since it was the first time Catalonia would be receiving more resources than the average, just as it had when this system had been first applied. But the 2010 tax statement makes it evident that Catalonia’s permanence within the common fiscal regime and the trend that system is heading in does not guarantee the progressive reduction of the Catalan fiscal deficit, but quite the contrary, this tends to perpetuate it.

Indeed, in 2009 Catalonia was the third community that paid the most, and the eighth to receive autonomous resources per capita. Above the average of 100, it contributed 119.2 and received 102.3. Thus, the only time Catalonia was ever above the average was that first year. The second year it dropped two places in the ranking.

These data explain that practically all the parliamentary groups, including those that had signed in favor of the current system recognize that a financial discrimination of Catalonia exists because the so-called ordinality principle is not being respected. In other words, roughly speaking, this means that Catalonia pays more because it is richer, but after having contributed to the rest of Spain, when it comes to autonomous financing per capita each Catalan on average ends up poorer than the inhabitants of those autonomous communities that it had subsidized.

If we look at the adjacent image, we see that only the autonomous communities of the former crown of Aragon and Madrid contribute more than they receive though autonomous financing. We can also see that eight communities position themselves ahead of Catalonia after having benefited from the solidarity transfers of the citizens of Catalonia, the Balearic Islands and Madrid, although the data from Madrid are always debatable. A good number of Madrid tax-payers are government employees and the public companies that live off of the taxes Spanish citizens pay as a whole, and this does not even take into consideration that because Madrid is the capital city, many big Spanish companies situate their headquarters there and thus pay the taxes of the autonomous community headed today by Esperanza Aguirre. The same goes for a number of institutions that choose to base themselves in Madrid because it is the capital. The classic example of this is the Prado museum, directly administered by the Spanish state, which saw its budget actually grow this year.

It is also important to keep in mind that the financing model of the autonomies is not the only factor that determines the Catalan fiscal deficit. If the comparison were made after including the investments of the Spanish state, the subsidies and the European funds, Catalonia would drop far below the average. All of this data explains why the Government of the Generalitat is so keen on changing the financial relationship between Catalonia and Spain. This also explains the tactical maneuvering of the parliamentary groups in preparation for the fiscal pact debate tomorrow [Wednesday, July 24th].

[On Monday] the groups presented their emendations to the Catalan Government’s proposal, which at present do not vary greatly from the positions they had already established. The big question continues to be just how much the socialists will support the fiscal pact. The President of the Generalitat, Artur Mas, and the leader of the Catalan socialist party PSC, Pere Navarro, are personally negotiating in parliament -in extremis- the attributions of the Catalan Tax Agency and the quota that would be returned to the Spanish state once the Generalitat had collected all of its taxes. [On Monday] they held two conversations on this matter, although they also spoke about the situation generated by the dramatic forest fire in the Empordà.

As we all know, the position of the Catalan Government, supported by CiU, ERC and ICV, is that the Catalan Tax Agency should have the only key to the tax safe, and that all the same it “could collaborate” with the tax administration of the Spanish state. The socialists prefer to see a consortium Generalitat-Spain that turns into the tax administration of Catalonia.

The teams of Mas and Navarro have been working on drafting the transactional emendations that will be made known today. The Catalan Government, in its pact with the socialists, has declared that it would not do anything that would make it lose the support of the [pro-independence party] Esquerra Republicana. In other words, giving up the control of the key to the safe is never going to be an option.

For the Catalan Government, the control of this key and their departure from the common regime are the antidotes to the systematic non-fulfillment of the agreements made with the governments of Spain. Just in case, ERC is pressuring on its own end and in its emendations includes the promise to start moving towards the independence of Catalonia –a State of our own- if the pact fails.