Spanish Government will not compensate Catalonia for cancelling its tax on bank deposits

The Catalan Executive considers the Spanish Government’s decision not to pay them the money corresponding to the revenue from the tax on bank deposits in 2013 “very bad news”. On the 18th December 2012, the Catalan Executive approved a tax on banks’ global deposits (not on personal deposits) with a general rate of 0.5% but with many reductions. Such a tax already existed in Andalusia, Extremadura and the Canaries. Nine days later, the Spanish Government approved its own tax, but at a 0% rate, therefore not collecting any money but cancelling de facto the Autonomous Communities’ tax. When this happens, the Spanish Executive is legally obliged to compensate the regional government, transferring the equivalent money. Madrid did so with the others, but not with Catalonia. Such a tax would have generated €800 million in revenue in 2013.

The Catalan Finance Minister, Andreu Mas-Colell, on Wednesday evening (by R. Pi de Cabanyes)
The Catalan Finance Minister, Andreu Mas-Colell, on Wednesday evening (by R. Pi de Cabanyes) / ACN

ACN

December 19, 2013 03:45 PM

Barcelona (ACN).- The Spanish Finance Minister, Cristóbal Montoro, announced on Wednesday evening that they will not pay the Catalan Government the money corresponding to the expected revenue for the tax on bank deposits in 2013, which might represent some €800 million. However, Montoro confirmed that in 2014 a Spanish tax on bank deposits will be in place and the money will be split among the Autonomous Communities, thus including Catalonia. On Thursday, the Catalan Finance Minister, Andreu Mas-Colell, considered the Spanish Government’s decision not to compensate them financially for having cancelled Catalonia’s tax for the entire 2013 “very bad news”. On the 18th December 2012, the Catalan Executive approved a tax on banks’ global deposits (not on personal deposits) with a general rate of 0.5% but with many reductions. Such a tax already existed in Andalusia, Extremadura and the Canaries. However, 9 days later the Spanish Government approved its own tax, but at a 0% rate, therefore not collecting any money but cancelling de facto the Autonomous Communities’ tax. When the Spanish Executive approves a tax equivalent to one previously approved by an Autonomous Community, the Spanish measure prevails but Madrid is legally obliged to compensate the affected regional governments. In this case, the Spanish Government compensated the 3 other Autonomous Communities but not Catalonia. The excuse was that the Catalan tax was to be in place as from the 1st of January 2013 and the Spanish Government approved its own tax on the 27th December.


On Thursday in Barcelona Andreu Mas-Colell criticised the Spanish Government’s decision not to compensate the tax in 2013, since Catalonia loses €800 million (initial calculations were talking about €500 million). However, he was hoping that the decision could be amended in court. The Constitutional Court temporarily suspended the Catalan tax's implementation in May, but a definitive decision is still pending.

In addition, Mas-Colell warned that “it was not clear” how the Spanish Government will compensate Catalonia for this tax in 2014, since the details of Montoro’s fiscal reform have not been announced yet and it will not be adopted in the first months of the year. “It is totally uncertain” he affirmed.

€800 million lost for cancelling the tax and €10-15 million lost for blocking the budget

Mas-Colell also criticised the People’s Party (PP) – which runs the Spanish Government – once again for having blocked the approval of the Catalan Executive’s budget for 2014. According to the Catalan Finance Minister, depending on the final delay, the PP’s decision could represent a loss of €10 million or €15 million, which is the money Catalonia’s Government will not be earning from new taxes, fees and rates that should have been in place on the 1st January 2014.