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Catalonia will not tolerate the elimination of the Autonomous Communities' taxation powers

The Catalan Government announced that, if the Spanish Executive finally decides to recentralise Catalonia's own taxes, they will take the issue to the Constitutional Court. The Catalan Finance Minister, Andreu Mas-Colell, stated that, if confirmed, "it would be a very provocative proposal" and "would make totally transparent, if it is not already transparent by now, the recentralising assault and the policy to dismantle the [current] Autonomous Community model". On Thursday an expert committee handed a report to the Spanish Government suggesting 270 measures to completely reform Spain's taxation system. The text states that the Spanish Government will "order" all the taxes, including those of the Autonomous Communities. Regional governments might continue having their own taxes but market unity will be a higher priority and taxes will always be "coordinated" by the Spanish Finance Ministry.

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13 March 2014 09:47 PM

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ACN

Barcelona (ACN).- The Catalan Government announced on Thursday that, if the Spanish Executive finally decides to recentralise Catalonia's own taxes, they will take the issue to the Constitutional Court. The Catalan Finance Minister, Andreu Mas-Colell, stated that, if confirmed, "it would be a very provocative proposal" and "would make totally transparent, if it is not already transparent by now, the recentralising assault and the policy to dismantle the [current] Autonomous Community model". On Thursday an expert committee handed a long report to the Spanish Government suggesting 270 measures to completely reform Spain's taxation system. The committee is chaired by Manuel Lagares, Chair Professor at Madrid's Universidad de Alcalá de Henares and former advisor to the People's Party (PP), and is formed by 8 other experts, almost all of them from Madrid's establishment. The document points out that the Spanish Government should "order" all the taxes, including those devolved to the Autonomous Communities. Regional governments might continue having their own taxes but they will always be "coordinated" by the Spanish Finance Ministry, which will set minimum and maximum rates. In addition, the Spanish Ministry could even cancel some taxation measures if it considers they go against market unity, prioritising this concept over the regional government's autonomy, recognised in the Spanish Constitution. Lagares emphasised that the committee "always had in mind Spain's interest" while writing the report.


The Spanish Finance Minister, Cristóbal Montoro, welcomed the 440-page document on Thursday afternoon and stated that the next Government Cabinet meeting – scheduled for the next morning – will study the proposal. "The ball is in the Government's court" stated Montoro. He also explained that in the next few weeks, the Executive will prepare its own proposal based on the recommendations of the experts’ report. By the summer, the Fiscal Reform should be sent to the Spanish Parliament, where the People's party holds an absolute majority, with the objective of having it implemented and enforced from the 1st of January 2015.

The Autonomous Communities' new funding scheme will have to wait

After the Fiscal Reform is adopted, Montoro stated that it will be the time to modify the current inter-territorial funding scheme, which transfers money among territories and also funds the Autonomous Community governments, including Catalonia's. The Catalan Government has been asking for a revision of this scheme since 2012, in order to have a new one ready by January 2014, when the current one expired. However, back in 2012 and during 2013 the Spanish Government refused to prioritise this reform, despite the loud claims from Catalonia and the political tensions. Back then it stated they would only deal with this reform in late 2014 or early 2015, which is what they will finally do. In fact, the Government chaired by Mariano Rajoy is following its own schedule and agenda, as if nothing was going on in Catalonia and using the absolute majority it holds in the Spanish Parliament.

Catalan society has been claiming for greater fiscal autonomy

A wide majority of the Catalan society, which according to polls represents between 75% and 80% of the population, has been claiming for greater fiscal powers for the last few years. A Fiscal Agreement, granting the Catalan Government greater fiscal powers was agreed upon between Catalan parties in mid-2012 and proposed to the Spanish Prime Minister Mariano Rajoy in September 2012, just after the massive 1.5 million strong demonstration in Barcelona asking for Catalonia's independence from Spain.

Back then, Rajoy rejected to even discuss the proposal and start negotiations to modify Catalonia's fiscal relation with the rest of Spain. Furthermore, the Spanish Government stated that Catalonia will never have a fiscal agreement as the Basque Country and Navarra have had for the last 3 decades, and that Catalan would continue being part of the general funding scheme. On top of this, such a scheme would only be modified in late 2014 or 2015, meaning that Catalan claims should wait at least 2 more years. It seems that the Spanish Government is sticking to its timing, but goes in the opposite direction of Catalan society's claims, since it aims to recentralise fiscal powers instead of granting Catalonia greater fiscal autonomy.

The Catalan Government will not tolerate a fiscal recentralisation

On Thursday, the Catalan Finance Minister, Andreu Mas-Colell, reacted to the fiscal recentralisation measures. Mas-Colell, who has been working as Economics Professor in Berkley and Harvard for more than two decades, stated that if the Spanish Government eliminates Catalan taxes or recentralised powers this "would be an extremely aggressive measure". "It would be a very provocative proposal; a proposal that would make totally transparent – if it is not already transparent by now – the recentralising assault and the policy to dismantle the [current] Autonomous Community model", he stated. Therefore, in such a scenario, "obviously we will defend ourselves in order to keep the powers to create our own taxes and have our own regulation capacity, which are already very limited but, conceptually speaking, they are an essential part of any reasonable autonomy", he said. Mas-Colell announced that the defence will be taking the reform to the Constitutional Court, among other actions.

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  • Montoro (left) receiving the report from Lagares (right) on Thursday (by ACN)

  • Montoro (left) receiving the report from Lagares (right) on Thursday (by ACN)
Catalonia will not tolerate the elimination of the Autonomous Communities' taxation powers