The Catalan President rejects raising taxes and states that a 10% budget cut is enough

Artur Mas, the President of the Catalan Government answered the Spanish Vice President for Economy, who yesterday suggested that he should raise taxes. He also wants to stop the debate about which percentage of the public expenditure should be cut, after the insistence from Madrid to go beyond the 10%. The Advisory Council for the Economic Recovery met today for the first time. Mas also announced a Catalan summit on economic recovery scheduled for the 25th of March.

CNA / Pere Francesch / Gaspar Pericay Coll

February 11, 2011 11:02 PM

Barcelona (ACN).- The President of the Catalan Government, Artur Mas, ensured that he will not cut the public expenditure beyond the 10% already announced. With these words, Mas wanted to end the debate about how much his Government should cut the public expenditure. Mas had already announced it would be 10%, but in the last two days, leaks from the Spanish Government were putting pressure to apply cuts beyond 10%. Even yesterday, the Spanish Vice President for Economy, Elena Salgado, suggested that a way to balance the budget is raising taxes to reach the deficit objective of 1.3% for 2011. Salgado’s words were taken in Catalonia as clear pressure. The Catalan President wanted to clarify that he would not raise taxation. “The recipe is not raising taxes. In Catalonia they are higher than other Spanish territories”. In fact, Mas recalled that Catalonia already had one of the highest taxation levels in Spain, that Catalonia suffers from an historical fiscal deficit due to the high levels of regional redistribution and that the Spanish Government owes money to Catalonia from the last years’ budgets.

In a press conference at the seat of the Catalan presidency, the Generalitat Palace, Mas wanted to clarify that going beyond a 10% cut would be too much. Mas said that in the meeting he had with the Spanish Prime Minister, José Luís Rodríguez Zapatero, on Monday, the Prime Minister did not ask him to go beyond this 10%. Mas explained that last Monday he told Zapatero, “with all the clarity” that the Catalan Government would make “a big effort” to reduce the public expenditure by 10%. Mas wanted to emphasise that never before in 30 years had a budget decrease happened. The Catalan President wanted also to stress that this decrease was already a “big sacrifice” for the Government. Then he added: “the [Spanish] State also had to guarantee us a concrete level of revenues, because cutting by 10% will already be very hard”. He insisted that “if this level of revenues from the [Spanish] State is not guaranteed, we cannot go beyond the 10%”. He concluded: “To reach the deficit objective, [set at 1.3% for 2011]  the Catalan Government must reduce its expenditure but also from the Spanish Government, which should give us, in a way or another, the revenues to which we are entitled”.

Artur Mas stressed that the main objective is not cutting the public expenditure to have austerity policies; Mas stressed that the priority is to boost the economic recovery, “how we can help to the country’s economic reactivation, which is the only thing that will make us quit the pit we are now into” and create employment. Mas explained that his “recipe” is not raising taxes to do that, on the contrary.

I respond to Salgado - we will not raise taxes”

In this line, the Catalan President was surprised by the words from the Spanish Economic Vice President. Mas said that “she knows that in Catalonia, last year, taxes were raised with the last Catalan Government”. He also emphasised that in Catalonia there is already now the highest revenue tax in Spain. He said, “taxes were raised to buy second hand flats, to enlarge capital, to constitute new companies, and there is a tax on fuel and a succession tax that are higher than in other parts of Spain”. He concluded that “the recipe is not raising taxes” as Catalonia has been placed by the Spanish Government and the previous Catalan Government “on top of the taxation levels” in Spain. Today, the Spanish First Vice President, Alfredo Pérez Rubalcaba, clarified that Salgado’s words were not an imposition but “a mere thought” on ways to balance a budget. He added that Salgado’s words “were a tutorial answer” saying that either expenditure is cut, either revenues are increased and to do this, raising taxes is one of the options.

The first meeting of the new Advisory Council for the Economic Reactivation and Growth (CAREC)

Today Mas chaired the first meeting of the recently created Advisory Council for the Economic Reactivation and Growth (CAREC). This council has members from the economic, professional and university world. It was created in December by the new Catalan Government and it has the mission to make studies and give advice on economic policies. The council has no cost as members attend for free. It is chaired by Abertis’ President, Salvador Alemany, and it has notorious members such as professors Jordi Galí, Xavier Vives and Germà Bel, and professionals from business such as Heribert Padrol (Gómez-Acebo & Pombo), Eugènia Bieto (ESADE), and Jordi Gual (La Caixa), among many other prestigious professionals and professors. The Catalan Minister for Economy, professor Andreu Mas-Colell was also present at the meeting.

25th of March: the Catalan Summit on Economy

Finally, the Catalan president also announced the date that the Catalan Summit on Economy will take place: the 25th of March. Mas promised a summit with all the main stakeholders on economy to create consensus on the main policies, reforms and strategies to foster the economic recovery. The summit will be attended by the entire Catalan Government, all the Catalan Parliament political groups, the Advisory Council (CAREC), trade unions, and business associations.