Octavio Granado, 20 Agosto 2024
From the left, the presidents of Castilla-La Mancha, Emiliano García-Page; Murcia, Fernando López Miras; the Valencian Community, Carlos Mazón; and Andalusia, Juan Manuel Moreno, were talking last January within the framework of Fitur. // EFE
Salvador Illa is the new president of the Generalitat. The time has come, therefore, to make a calm reading of what can be deduced from the agreement signed between the PSC and ERC on the financing of the autonomous community, avoiding hasty judgements and prejudices that cannot be deduced automatically. A simple example: if Catalonia collects all its revenue through a consortium between the Tax Agency and the community, it would be outside the common regime, unless a modification of the Organic Law on the Financing of the Autonomous Communities (LOFCA) allowed all autonomous regions to collect their tax revenue through similar consortia. In this case, Catalonia’s financing would be ‘singular’, but not radically outside the common system.
The Constitution does not sufficiently clarify which tax revenues correspond to the communities. This shortcoming has led to financing systems implemented by means of specific organic laws, from which some autonomous regions have sometimes been excluded, and in almost all cases a very close relationship between each system and political agreements at the state or territorial level.
Each new system has always meant an increase in the resources of the communities, at the same time as an increase in the weight of taxes, whether ceded or shared, in their financing.
The current system was approved unanimously at a time of serious financial crisis and has been applied in similar periods by PP and PSOE governments, with a very convenient general dissatisfaction with its fairness. The presentation of a modification of the system in a Catalan key (as happened with the increase in the transfer of personal income tax from 15% to 30%) has generated suspicions. It emphasises a concept, ‘singularity’, which has always been in demand in Catalonia. Even the Popular Party pledged to defend it in its 2012 electoral programme. But our asymmetrical federalism is riddled with singularities. Let us not only talk about the economic and fiscal regime of the Canary Islands. The uniprovincial communities merged the finances of the former provincial council with those of the autonomous region, and this singularity has benefited them in administrative, but also financial terms, and serves as a lure for secessionist proclamations. Jesús Ruiz-Huerta and I analysed the 2001 system for the Fundación Ortega y Gasset. The multiplication of ‘singularities’ was such that the sum of them attributed greater resources than the general rules.
Any financing that aspires to a minimum of equity and justice will be complicated, and will have to recognise multiple singularities. No one has questioned the Catalan consortium, which was accepted by the Constitutional Court, but we should start to think about whether this formula should not be general, in order to implement something that has so far been rare in the tax sphere: institutional loyalty. We have laws that are applied to avoid legal reforms by other administrations, symbolic zero quotas that only seek to avoid the entry into the tax-free field of other non-assigned taxes, a shameless claim of solidarity after the application of indefensible tax benefits, strategies of attraction of the main assets to achieve changes of residence, and other manoeuvres that the existence of equal and neutral institutions, far from the media and political spotlight, could undo.
Moreover, it is clear that when an administration spends without collecting money, it is difficult for citizens to control and unproductive spending is facilitated. And the communities, which currently manage the fundamental public services (education, health, part of the social services) should take advantage of their greater proximity to ensure that taxation becomes more efficient. We are getting so used to not demanding accountability that when the time comes for us to be strangled, we will be unprotected.
Here is another example: my community, Castilla y León, receives magnificent attention from the Next Generation funds. As part of the co-financing falls on the regional administration, the latter, in order to meet its new commitments, has left the material investments of the public universities without funding (transferred by the State at the time).
Greater responsibility and the implementation of institutions that make fiscal loyalty possible could be based on funding reforms such as the one proposed by Catalonia. Unfortunately for us, as has always been the case, they will be linked to government pacts. And they have risks: if the common rule that sets spending standards in all territories is broken, the operation will be disastrous. But if it is done well it could have positive effects throughout Spain, and perhaps the opportunity will be worth it.
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