tax

Josep Lluís Núñez Clemente – aged 83 – and his son – who had been Director of the family company – have been accused of bribing tax inspectors in the 1990s regarding their private business and have entered jail this weekend for a 2 year sentence. Núñez senior chaired FC Barcelona between 1978 and 2000 but his sentence has nothing to do with the famous sports club's activities. After one of the longest judicial processes in Spain's history, Núñez senior and his son were initially convicted in July 2011 with 6 years in prison and a €2 million fine. They were accused of bribing tax inspectors with €1 million in order to avoid paying more than €13 million in taxes between 1991 and 1999, and of forging official documents. However, they appealed the decision and the Spanish Supreme Court reduced their prison time. They filed a last appeal to avoid going to prison but in October 2014 Barcelona's High Court ratified their imprisonment. Considering Núñez senior's age, he could be granted day parole in a few weeks.

The left-wing Catalan independence party ERC, which has shared a parliamentary stability agreement with the governing centre-right pro-Catalan State coalition CiU for the last 2 years, is pushing to begin a new political period. The ERC’s leader, Oriol Junqueras, met on Thursday with the President of the Catalan Government and CiU’s leader, Artur Mas, and confirmed to him that they will not back the new budget for 2015. The evening before, Junqueras had presented his road map for the next few months. The ERC wants early elections now, which would become “constituent elections” if a majority of pro-independence parties were to win. Furthermore, the ERC prefers to run alone, not in a shared electoral list. If Catalans voted for a majority of pro-independence parties, the new Parliament would start building the new state’s basic structures and drafting a Constitution, which would have to be later ratified through a binding referendum.

40 municipalities in Barcelona's Metropolitan Area, are to half the price of public transport during incidents of high air pollution. This is part of a Catalan Government plan for the improvement of air quality with the goal to fight climate change, affecting 4.3 million people. The main objective of the plan is to reduce emissions of nitrogen oxides (NOx) and of particle matter less than 10 microns in diameter (PM10). The plan also includes the promotion of rail travel and increasing highway tolls and the fares of municipal parking within these areas by 25% on polluted days. In addition, there will be tax breaks for those industries achieving lower emissions. The measures are aimed at the mobility of people and goods, industrial activity, and citizens’ habits.

On Friday the Spanish Tax Agency delivered a summons to the historical leader of Catalan nationalism, Jordi Pujol, who confessed two weeks ago that his family had non-declared money from his father's inheritance in fiscal paradises for more than 35 years. Also on Friday, the Barcelona judge investigating the case requested that Pujol hand in his father's last will and the document accepting the inheritance. In addition, the judge sent petitions to Andorra and Switzerland for financial information about Pujol, his wife and his 7 children. Several media outlets have reported that 4 of Pujol's sons could have fortunes abroad, allegedly out of tax control and coming from corrupt activities. Meanwhile, the person who chaired the Catalan Government between 1980 and 2003 and was essential in Spain's democratic transition and modern history, has been cast out of the party he founded (CDC) and has had all his official honours, pension and office taken away from him.

The Catalan Government approved on Tuesday a measure to impose a tax on empty flats owned by financial institutions. The aim of the tax is to incentivise banks to rent out the empty homes. Santi Vila, the Catalan Minister for Planning and Sustainability, said that the "mere announcement" of the tax has already caused Sareb [Spain's public 'bad bank'], Catalunya Caixa and Bankia to yield to the Government 1,230 apartments for social rent. During the press conference after the weekly Cabinet meeting, Vila pointed out that the new tax will not apply to individuals and will only be intended for flats that have been taken out of the market for more than two years. The Minister also said that the measure is not simply about "tax collection" but is instead to ease the access to housing market in the midst of a housing crisis.

The Catalan Minister for Territory and Sustainability, Santi Vila, who is also in charge of housing policies, presented on Tuesday the draft of a new tax bill on empty flats and houses owned by financial institutions in Catalonia. During a press conference, Vila explained that such a tax is looking to be an “incentive” for banks to make available their 15,000 flats spread across 70 municipalities with “proven demand” for housing, mainly around Barcelona, Tarragona, Lleida and Girona, and which have been empty for more than 2 years without a justified cause. The amount of the tax will be based on the total number of square meters owned by the banks and will include significant accumulative bonuses if the institutions decide to rent their properties, notably for social housing. The Catalan Government estimates that banks own around 40,000 empty flats, including in areas with housing demand.

The new Tax Administration of Catalonia (called ‘Tributs de Catalunya’) has been launched on Thursday in a ceremony chaired by Artur Mas, the President of the Catalan Government. Mas highlighted that “all of this is not against the Spanish State” but “an investment for a better Catalonia”. The new body was created from merging the existing Catalan Government’s Tax Agency and the ones of the four Provincial Councils (Barcelona, Girona, Lleida and Tarragona). Its creation was already foreseen in the Catalan Statute of Autonomy approved by the Spanish Parliament and the Catalan people through a binding referendum in 2006. It will start with 53 branches, which will mostly deal with municipal taxes. Gradually it will dispose of up to 200 offices dedicated to ensure Catalonia’s fiscal sufficiency. The project was launched in September 2012, aiming to build “a state structure” that would ultimately be able to collect all the taxes generated in Catalonia if needed.

The Catalan Government has approved 3 new environmental taxes on the air pollution emissions of commercial flights, industrial gas and particle emission, and the nuclear production of electric energy. €50 million are expected to be raised per year once the law will be enforced, which is scheduled for mid-year. The Spokesperson for the Catalan Government, Francesc Homs, has admitted that flights at Barcelona’s El Prat Airport would likely be affected. However, he ensured that none of these 3 new taxes would have a negative impact on the consumers. The law specifies that the tax cannot affect pricing, neither for plane tickets nor for electricity, pointed out Homs. He then put in contrast the €98 million fees an airline can have to pay to the Spanish Airport Authority (AENA) with the €1 million in taxes that may be levied by the Catalan Government.

The economic crisis and especially the recession starting in 2009 have contributed to the growing weight of the underground economy in Catalonia and in Spain, according to a study presented on Wednesday by the Spanish Ministry of Finance’s Union of Technicians (Gestha). This study is entitled ‘L’economia submergida passa factura. Avançament del frau a Espanya durant la crisi’ (Underground economy takes its toll. Growing fraud in Spain during the crisis) and is led by Jordi Sardà, a professor at Tarragona’s Universitat Rovira i Virgili (URV). It reveals that according to the latest figures (from 2012) the underground economy has absorbed 24.6% of Catalonia’s GDP, hiding €47.36 billion. In 2009 the weight of illegal activity amounted to 22.3 %, meaning that between 2009 and 2012 some €4.6 billion were hidden.

The Catalan Government’s Advisory Council for the National Transition (CATN), formed of renowned independent experts, emphasised that Catalonia’s independence from Spain would not represent breaking their affective and historical bounds. Furthermore, they insisted on the need to continue and even to increase cooperation “based on a new principle of equality and mutual respect between both parties”. They have suggested different ways to cooperate, through different structures. For instance, they proposed the creation of the ‘Iberian Council’ bringing together Catalonia and Spain, as well as Portugal and Andorra if they wished to, which would mirror the Nordic Council or the Benelux. Furthermore, the CATN issued three other reports, including a detailed analysis of Catalonia’s tax agency.

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 18^th 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 Spanish Prime Minister, Mariano Rajoy, has confirmed that “in theory” the Spanish Government will implement a tax on bank deposits in 2014 – taxing the global amount of deposits and not individual ones. The revenue from this tax will be transferred to the Autonomous Communities. Furthermore, Rajoy stated that he “is studying” the question of compensating the Catalan Government financially for not having allowed them to implement such a tax in 2013. Catalonia approved a tax on bank deposits for 2013 in December 2012, aiming to collect €500 million per year. However the Spanish Executive approved its own tax a few days later, but at a 0% rate, de facto cancelling Catalonia’s. Despite the fact that Madrid has been compensating Andalusia, Extremadura and the Canaries for the same tax, it refused to compensate the Catalan Government.

In addition, the Catalan Chamber has also approved setting up the exact date, question and legal process for the self-determination vote before the end of the year. The resolution was approved with 65% of the Catalan Parliament’s members voting in favour. However, the Catalan Socialist Party (PSC) – which is part of the Spanish Socialist Party (PSOE) – finally decided to vote against the text. The request was approved with the votes of the Centre-Right Catalan Nationalist Coalition (CiU) – which runs the Catalan Government, the Left-Wing Catalan Independence Party (ERC), the Catalan Green Socialist and Communist Coalition (ICV-EUiA) and the radical left wing and independence party CUP. The PSC, the People’s Party (PP) – which runs the Spanish Government – and the anti-Catalan nationalist and populist party Ciutadans (C’s) voted against.

In the last three years, 1,060 companies have moved their headquarters from Catalonia to the region of Madrid, according to a report published by Madrid’s regional Government. The report states that most of them took the decision because of the lower taxes that exist in Spain’s capital, compared to other areas such as Catalonia. Since 2010, 5,000 companies based in the rest of Spain decided to move to Madrid; 21.4% of them were from Catalonia. Paradoxically, 43 cents out of every euro paid in taxes in Catalonia is to pay for investments and services made in other parts of Spain, which turns into an annual fiscal deficit of 8.5% of Catalonia’s GDP, meaning that Catalans are obliged by the Spanish Government to give away €16.5 billion. Meanwhile, the Catalan Government is under-budgeted and obliged to implement severe budget cuts and raise taxes to balance the budget.

The Wealth Transfer Tax, which is levied on sales of second-hand housing units and any other used real estate, will be raised from 8% to 10% as from the 1st of August. The Catalan Government expects to earn an additional €50 million in 2013 and €150 million in 2014. The Catalan Finance Minister, Andreu Mas-Colell, argued that the rise in the tax rate is equivalent to the VAT charged on sales of new housing units and that both taxes should be “parallel”. He also added that other Autonomous Communities had previously raised this tax to similar levels.