The European Parliament asks for the deficit targets to be split “in a fair way” among government levels
The Spanish Government is keeping most of the 4.5% public deficit allowed to the entire Spanish public sector in 2013 for itself, despite managing only 50% of the total public spending. It has allowed itself a 3.8% deficit while it has imposed a 0.7% target on the regional governments, which manage almost 40% of the public spending including basic services such as healthcare and education. The European Parliament report indirectly asks Madrid to relax the Autonomous Communities’ deficit targets according to the basic services they provide. In addition, it also states that regional governments should have greater fiscal capacities and depend less on central government transfers. Furthermore, the report asks “some member states” to eliminate the ministries whose powers have been devolved and to “reduce unnecessary defence expenditures”.
Brussels (ACN).- The European Parliament approved a report on Wednesday indirectly asking the Spanish Government to relax the deficit targets for the Autonomous Communities for 2013 by splitting the deficit objectives in a fairer way among the different government levels. The report, approved by the People\u2019s Party, the Socialists, the Liberals and the Greens, does not mention specific cases but insists that \u201Cfiscal consolidation efforts should be shared between the different administrations in a fair way, taking into account the services they provide\u201D. Therefore, according to the Euro MPs, the Autonomous Communities\u2019 deficit targets should correspond to their share of Spain\u2019s total public spending and the importance of providing basic Welfare State services for the citizens. However, the Spanish Government is currently imposing a deficit target of 0.7% for 2013 on the Autonomous governments, despite the fact that they exclusively manage the main basic services \u2013 such as healthcare, education and social policies \u2013 and more than 36% of Spain\u2019s total public spending. In addition, the Catalan Government has even more powers \u2013 such as prisons and police \u2013 yet manages a greater proportion of public resources. Meanwhile, the Spanish Government has to meet a 3.8% deficit objective, despite managing only 50% of the total public spending. This means that the Spanish Government is keeping 84.5% of the 4.5% public deficit allowed by the European Union for the entire Spanish public sector this year for itself, while the Autonomous Communities only get 15.5%. The Catalan Government is currently asking for the redistribution of the 4.5% deficit target allowed to Spain among the different government levels and the allocation of a 1.5% target for the Autonomous Communalities, corresponding to a third of the total deficit for 2013. However, the Spanish Government has refused the proposal.
Furthermore, the \u2018Report on Public Finances in EMU \u2013 2011 and 2012\u2019, compiled by the Italian Conservative Alfredo Pallone, also insists that it is \u201Cconcerned\u201D that \u201Cdecentralisation is financed predominantly through transfers from the central government and is not matched by sub-national responsibility on the revenue side\u201D. This is in line with the Catalan Government\u2019s claims for greater fiscal capacities and less dependence on the Spanish Government\u2019s transfer of money that has previously been raised in Catalonia by the Spanish Executive through taxes. On top of this, the European Parliament\u2019s non-binding resolution also states its \u201Cconcern\u201D that \u201Cin some Member States [\u2026]ministries may exist without concrete powers and tasks; these sub-sectors of government make the general administration more inefficient and profligate and should therefore be eliminated as part of the fiscal consolidation efforts\u201D. Applying the resolution to Spain, the Spanish Government should eliminate two of its ministries, since almost all of their power has been transferred to the Autonomous Communities; they are the Ministry of Healthcare and that of Education and Culture. However, the Spanish Government is currently recentralising power in Education and it is trying to have the Catalan Government more dependant on money transfers from Madrid by suspending some of the Catalan Government\u2019s fiscal measures and making deficit targets more difficult to reach, as the President of the Catalan Government, Artur Mas, denounced today.
The Spanish Government hits Catalonia\u2019s fiscal capacity and prevents it from earning \u20AC820 million
The day after the Spanish Constitutional Court suspended three fiscal measures approved by the Catalan Government by accepting an appeal from the Spanish Executive, the European Parliament has approved a resolution asking for the Autonomous Communities to be allowed greater fiscal capacity. The Spanish Government believes the Catalan initiatives were invading its own jurisdiction and managed to have them suspended for a five-month period, which could be extended further. The Catalan Government has calculated that the three measures combined would have represented \u20AC820 million revenue in 2013, which will not longer be in the budget. \u20AC500 million would correspond to the tax on bank deposits, \u20AC90 million would be directly raised by the drug prescription fee, \u20AC220 million would be saved from pharmaceutical spending by the demand reduction caused by the drug prescription fee and \u20AC10 million would be collected through judicial fees. Therefore, losing \u20AC820 million in one year makes it harder for Catalonia to meet the 0.7% deficit target imposed by Madrid, which represents \u20AC1.4 billion.
The Catalan President accuses Madrid of fiscal asphyxia for centralist reasons
The President of the Catalan Executive and leader of the Centre-Right Catalan Nationalist Coalition (CiU), Artur Mas, accused the Spanish Government of following a strategy to put the government he chairs against the ropes. According to Mas, Madrid\u2019s final aim would be to have greater control over the Catalan Government\u2019s finances by making it more dependent on the Spanish Executive\u2019s transfers. In order to attain this objective, the Spanish Government is imposing strict deficit targets on the Catalan Executive and is also putting obstacles in the way of the new fiscal measures in order to provoke fiscal asphyxia. Such asphyxia would enable the Spanish Government to take any devolved power back and have greater control over the remaining Catalan Executive. This strategy would restrict Catalonia\u2019s self-government and completely change the spirit of the Spanish Constitution and the Transition after the death of Franco, which were mostly based on two drives: democracy and decentralisation.
Eliminating \u201Cunnecessary defence expenditures\u201D and \u201Capplying cost-benefit analyses to all infrastructures\u201D
Besides, the European Parliament\u2019s \u2018Report on Public Finances in the EMU \u2013 2011 and 2012\u2019 is not only insisting on the elimination of ministries whose power has been transferred to regional governments, but it also \u201Ccalls on Member States with budgetary problems to give priority to fiscal consolidation measures aimed at reducing unnecessary defence expenditures such as purchases of new and expensive military equipment\u201D. In fact, while the Spanish Government is imposing strict budget reductions on the Autonomies, which exclusively manage healthcare, education and social policies, it is keeping many of its military equipment programs and purchase orders, such as the 250 Leopard tanks that have been bought to Germany. In addition, it is not eliminating ministries with almost no power, such as \u2018Healthcare\u2019 and \u2018Education and Culture\u2019.
In addition, the Spanish Government is continuing to build the High-Speed Railway in rural zones and expanding what is already the world\u2019s second largest High-Speed Train network today, after China. The European Parliament report \u201Cconsiders that in order to attain balanced public finances for the medium and long term, it is important to apply cost-benefit analyses to all infrastructure projects with significant budgetary weight\u201D. However, the Spanish Government has not prioritised certain essential infrastructures with a high cost-benefit ratio, such as the Mediterranean Railway Corridor, which could connect Central and Northern Europe with Gibraltar and all Spain\u2019s Mediterranean ports and industrial centres. Instead, Madrid is insisting on building this key infrastructure for Europe\u2019s economy in parallel with many other expensive projects with very low cost-benefit ratios, which result in no priorities being set and the construction of the most important projects being delayed since not enough funds are available.