NOTE! This site uses cookies

By continuing to browse the site you are agreeing to our use of cookies. For more detalis, see Read more

Accept

What are you looking for?

Catalonia posted a fiscal deficit of 7.7% of its GDP in 2011, equivalent to €2,055 per citizen

The Catalan Government issued on Thursday its own calculation of the so-called fiscal balances with the latest data available, which is from 2011. In that year, Catalans funded services and infrastructure in the rest of Spain for €15 billion, equivalent to 7.7% of Catalonia's GDP or €2,055 per citizen, using the monetary flow formula. Using the tax-benefit method, Catalonia contributed €11.1 billion, equivalent to 5.7% of its GDP. The two methods are "complementary", as the Catalan Finance Minister, Andreu Mas-Colell stated, although the first one makes less assumptions and is closer to reality in times of economic crisis and high unemployment. "Catalonia is a net and generous contributor" to the whole of Spain, he said. In fact, the figures for 2011 confirm Catalonia's "sustained" negative "fiscal balance" for the 1986-2011 period, with an average 8.0% fiscal deficit. This has been for decades a very sensitive issue in Catalan and Spanish politics, and even more considering the self-determination debate.

SHARE

12 June 2014 08:00 PM

by

ACN

Barcelona (ACN).- The Catalan Government issued on Thursday its own calculation of the so-called fiscal balances with the latest data available, which is from 2011. In that year, Catalans funded services and infrastructure in the rest of Spain for €15.01 billion, equivalent to €2,055 per citizen or 7.7% of Catalonia's GDP, using the monetary flow formula (measuring where the investment takes place). Using the tax-benefit method (measuring welfare), Catalonia contributed €11.09 billion, equivalent to 5.7% of its GDP. The two methods are "complementary", as the Catalan Finance Minister, Andreu Mas-Colell stated, although the monetary-flow one is more widespread, makes less assumptions and is closer to reality in times of economic crisis and high unemployment. "Catalonia is a net and generous contributor" to the whole of Spain and "Catalans pay for everything they receive and substantially more", he added. In 2011, Catalans contributed 19.2% of Spain's total public revenue, according to Mas-Colell’s calculations. However, they only received 14.0% of the spending of the Spanish Government and associated bodies (independent agencies, public companies and the Social Security system). Without taking Social Security into account – which is not managed in a discretional way since it is run according to people's rights and contributions, Catalans only received 9.4% of the spending, while it represents 18.6% of Spain's GDP and 16% of the population. In fact, the figures for 2011 confirm Catalonia's "sustained" negative "fiscal balance" for the 1986-2011 period, which posts an average 8.0% fiscal deficit per year, according to Mac-Colell. This "fiscal deficit" directly affects the funding of Catalonia's public services, which receive less funding than poorer parts of Spain and therefore put vulnerable Catalan citizens into a situation of disadvantage.  In addition, it slows down the economic growth and damages the competitiveness of the economy. In a time of economic crisis, with drastic budget cuts in place, public services under stress and Catalan companies making great efforts to export, this "fiscal deficit" becomes more obvious and a greater problem.


Catalonia's fiscal contributions have been for decades a very sensitive issue in Catalan and Spanish politics, and even more considering the self-determination and independence debates of the last two years. However, the issue has been on the table for a very long while. The wide majority of Catalan society (including all business associations and most of the political parties) has been asking for decades to reduce such contribution levels and, at the same time, to keep a certain degree of solidarity with poorer regions. However, the Spanish Government, no matter if it was run by the People's Party (PP) or the Socialist Party (PSOE), has rejected to significantly modify this trend, which under-budgets public services in Catalonia and damages its economy and competitiveness.

A Fiscal Agreement aiming to reduce such contributions

In this line, the President of the Catalan Government, Artur Mas, proposed to the Spanish Prime Minister Mariano Rajoy to negotiate a Fiscal Agreement for Catalonia, similar to the one the Basque Country and Navarra have. In this new Fiscal Pact, the Catalan Government will have the powers to collect all the taxes and will transfer an amount to the Spanish Executive to pay for three basic concepts: general services, services and investments made in Catalonia and solidarity contributions with poorer regions and countries. The main advantage of this is that the Catalan Executive would control the money and would know exactly how much  is collected and how much is returned. The proposal for a new Fiscal Agreement had been debated in Catalonia since 2010 and a group of political parties agreed to push for it in mid-2012. In September 2012, Artur Mas met with Mariano Rajoy a few days after the massive pro-independence demonstration that gathered 1.5 million people in Barcelona (according to Catalan Police) and proposed this new Fiscal Pact. Rajoy completely closed the door and refused to even talk about it. This rejection fuelled the camp of those supporting independence.

The Spanish Government has only published the fiscal balances once in 37 years

There is a persistent lack of transparency regarding such figures at Spanish level and some politicians outside Catalonia have downplayed or even directly denied the fact that Catalans are greatly contributing to fund poorer parts of Spain, or have accused Catalans of being greedy. The Spanish Government only published such figures once in the 37 years of democracy. In 2008, the Spanish Finance Ministry stated that Catalonia had a fiscal deficit between 8.7% and 6.4% (depending on the calculation formula) in 2005, the only year included in the study. Since that moment, the Catalan Government started to publish its own calculation every year, including the accumulated figures since 1986, when there is comparable data available.

The current Spanish Government promised to publish again the fiscal balances but with a new methodology in December 2013. In January 2014, the Spanish Finance Minister, Cristóbal Montoro, stated that they would be published in March and he underlined that the previous methodology "was fuelling independence arguments". Meanwhile, many members of the academia criticised the decision to change a methodology in line with that used in other countries and designed with university experts. When March arrived, Montoro said they would be issued by June. At that time, Catalan business associations started to urge for issuing the fiscal balances with the two methodologies and criticised the Spanish Government for delaying their publication.

The fiscal deficit of 2011 would almost pay for the entire healthcare, education and social budgets

The Catalan Government, as it has been doing over the past few years each spring, is publishing its own calculation of the fiscal balances. With the monetary flow formula, Catalans contributed €54.91 billion in 2011: €47.73 billion corresponding to revenue of 2011 and €7.19 billion corresponding to the debt generated this year (which will have to be paid in the coming years). The Spanish Government and associated bodies, including the Social Security, spent €39.90 billion in Catalonia. This results in a negative balance of €15.01 billion, representing 7.7% of Catalonia's entire GDP. In 2011, the Catalan Government spent €16.32 billion in healthcare, education and social welfare (considering it exclusively manages the entire health and education systems in Catalonia). In addition, the Spanish Government's spending in Defence and Security (the military and police) reached €15.27 billion. Furthermore, in that year, Spain received a total of €13.27 billion from the European Union and contributed just €12.12 billion to the EU budget.

SHARE

  • The Catalan Finance Minister, former Harvard and Berkeley Professor, Andreu Mas-Colell presenting the 2011 fiscal balances (by J. R. Torné)

  • The Catalan Finance Minister, former Harvard and Berkeley Professor, Andreu Mas-Colell presenting the 2011 fiscal balances (by J. R. Torné)