Interview with Professor Andreu Mas-Colell at his home in Barcelona.
Dani Cordero, Barcelona 8 September 2024
Image: MASSIMILIANO MINOCRI
The former Catalan minister advocates remodelling the funding system with more resources and in which all the regions get at least the same resources that Cantabria receives today.
The economic arguments of Andreu Mas-Colell (Barcelona, 80 years old), former Minister of Economy in the Generalitat of Artur Mas, have always been listened to with attention. Also in view of the new framework that seems to be opening up with the renewal of the financing model in Spain, catalysed in recent months by the agreement between the PSC and ERC for the Generalitat to collect all taxes in the community. ‘I want to talk about concepts, not figures’, he replies from the sofa in his house when asked about how much it would have to contribute to solidarity or how much more revenue Catalonia should have under the new system. He drops just one number: what he considers necessary to improve health, education and other social services. And it is the equivalent of 2% of GDP, which he asks the state to transfer to the autonomous regions, the holders of these competencies.
Question. You were his Minister of Economy when Artur Mas presented his proposal for a fiscal pact. Do you now recognise it in the ERC and PSC investiture pact?
Answer. In spirit, yes, but above all what Mas proposed to Rajoy was to prioritise the economy. And in this sense, Esquerra has done the same, to create a suitable climate that will then allow us to move on to political issues. It is wise to have proposed economic organisation as the first stage in Catalonia’s integration. And I want to insist, it is not just a question of how much is received, but of the organisation.
Q. Are you referring to the role of the Catalan Tax Agency and the collection of taxes by the Generalitat?
R. There are two dimensions. One is quantitative, that is, the resources that go to all the autonomous regions and in particular to Catalonia. And the second is the agency. Both are very important, but different. With regard to the first, it is essential that we in Catalonia put forward proposals for globality. Catalonia’s experience in leading the financing model in the past has not worked, but that does not mean that it cannot be the driving force behind the reform of the financing model. It is one thing to lead and another to drive, and the fundamental issue of financing is not directly related to the organisation of the State, but rather to the competencies of the communities, and this is where education, health and many social services come in. Spanish public spending must be rebalanced on the basis of these competences. Not because they are autonomous, but because they are health care, health and social services. If in Germany public spending per capita on health is five, in Spain it is two. The level of the health system we have cannot be maintained without adequate funding. I believe that it should at least increase by 1% of GDP. And in education the situation is perhaps not so dramatic, but it is also dramatic: half a point below the European average.
P. President Pedro Sánchez has announced that he will double the territorial compensation funds.
R. The challenge is very big, much more than increasing the solidarity fund, which is peanuts. We have to increase the resources of these competences, which are autonomous, by around 2%. We should not think so much in terms of financing the autonomous regions as in terms of financing the needs of the people, of health and education. We have improved a lot in pensions, now it is time to make an effort in this area. It will be the last chance.
We have improved a lot in pensions, now we need to make an effort in social services. It will be the last chance.
Q. Why the last chance?
R. Because if the tax burden grows now, it will not be able to grow any more. And if we do nothing and spend the small margins that may exist now without prioritising health and education, that possibility will be left hanging. Spanish public spending must be rebalanced on the basis of these competences. Not because they are autonomous, but because they are health care, health and social services. If in Germany public spending per capita on health is five, in Spain it is two. The level of the health system we have cannot be maintained without adequate funding. The Mediterranean coast is in the worst situation. We start from a very messy situation, which generates situations of inequality: there are communities that receive 4 and others that receive 3.2. In Germany, all the länder receive the same. If we were starting from zero, we would have to go that way, but as we are not starting from zero, we will have to ensure that nobody loses, that all the communities are at least at the level of Cantabria, which receives the most. It is necessary to increase the total amount of money that there is for our autonomous regions and the increase must be distributed with the aim of equalising everyone at the current highest point. How this is done, I don’t go into… What we have to avoid is a messy system with an unequal distribution.
Q. On that basis, would transfers from the State to the communities for these items without modifying the financing system be a valid formula?
A. Perfectly valid, yes.
Q. Of the PSC-ERC agreement, for you, the most significant thing is that Catalonia collects 100% of its taxes through the Catalan Tax Agency?
A. Catalonia wants to have a tax agency that collects all taxes, and this is perfectly constitutional, as article 204.3 of the Statute says that the Generalitat can receive tax management delegations from a tax consortium or an equivalent body that is a joint entity between the State and the Generalitat. Negotiations will have to be held, and I anticipate that a crucial issue will be whether this agency belongs to the Generalitat or not. If this means that the Catalan Tax Agency (ATC) is absorbed by the Spanish agency, there will be no agreement. It may be present, but an agreement will only be possible if it has no veto power.
Q. How does this TCA tie in with the financing system?
A. It will be complex, but technically possible. I suppose that the starting point would be to retain 100% of the IRPF, because 50% of this revenue, which is now what the State keeps, is equivalent to the advances on account that the central government now sends to Catalonia. Because if the tax burden grows now, it will not be able to grow any more. And if we do nothing and spend the small margins that may exist now without prioritising health and education, that possibility will be left hanging. I’m not talking about increasing that 2% in a year, but I am talking about increasing it in a legislature or a legislature and a half.
Q. Where can these resources come from?
A. On the one hand, through economic growth. Part of it could come from savings and the efficiency of the Administration, even a reduction in the level of debt [with respect to GDP]. And Spain’s tax burden stands at 38%, compared to 41% in Europe. Well, if that percentage can be increased, I want resources to go to health.
Q. But is Catalonia in a position to improve the global model of regional funding?
A. Catalonia has to be with all the autonomous communities, whether they belong to the PSOE or the PP. Although the PP has tried to mobilise the autonomous communities against the reform suggested by ERC, it has had to state that the money that goes to the communities is insufficient. And for Feijóo it would be suicidal to suggest that Valencia, Murcia or Andalusia are well financed, because obviously they are not. The Mediterranean coast is in the worst situation. We start from a very messy situation, which generates situations of inequality: there are communities that receive 4 and others that receive 3.2. In Germany, all the länder receive the same. If we were starting from zero, we would have to go that way, but as we are not starting from zero, we will have to ensure that nobody loses, that all the communities are at least at the level of Cantabria, which receives the most.
It is necessary to increase the total amount of money that there is for our autonomous regions and the increase must be distributed with the aim of equalising everyone at the current highest point. How this is done, I don’t go into… What we have to avoid is a messy system with an unequal distribution.
Q. You are against talking about an economic agreement in the case of the Catalan financing proposal. What is an economic agreement?
A. It is a concept that describes the fiscal system of the Basque Country and Navarre, and if there is no quota there is no agreement. And in the ERC-PSC agreement there is no such quota.
The economic agreement describes the tax system of the Basque Country and Navarre and if there is no quota, there is no agreement. And in the ERC-PSC agreement there is no such quota’.
Q. And why do so many people call it an agreement?
A. Because we have always been reflected in the Basque Country and people want to play with ambiguities. I don’t care what it’s called. I know that the advance of the ATC is an important step forward for the co-responsibility of Catalonia, to have high-level public servants, to have a central organisation for tax collection in Catalonia. And it is good that Catalonia is seen as a net contributor of resources for solidarity.
Q. What percentage of solidarity do you think Catalonia should have?
A. I don’t make any pronouncements. Catalonia would now need to have the same resources per capita as Cantabria.
Q. Is it possible to bring all the communities into agreement when each one has its own demands and they are often contradictory?
A. I try to be simple and speak for myself. The Government has to decide, but without making too big an adjustment. We are in a fortunate situation, because the needs in health and education give us the opportunity to distribute increases rather than how to distribute them. It is not good policy to give more resources to solve grievances, but because there is a need. If you want to do it right, kill two birds with one stone: strengthen social services and, moreover, if you do it right you will achieve a more egalitarian distribution and put an end to the grievance, leaving aside the foral communities. The grievance is the health and education grievance. What we share with Valencia, the Balearic Islands, Andalusia… I wouldn’t dare say with Madrid.
Q. Catalonia has been accused of wanting to benefit at the expense of the other autonomous communities.
A.That is demagogy. Well, if you have a zero-sum approach [that there should be no new resources for the autonomous communities], yes, but that is not the case.
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