April 23, 2024

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ERC becomes the spokesman in the fight against fiscal dumping, although the agreement became more explicit between the PSOE and Cs in 2016 in their failed attempt to form a government: a commission of experts for a tax reform, a tax on large fortunes, and harmonizing inheritance and patrimony "to end competition in both taxes by the autonomous communities".


The President of the Government, Pedro Sánchez, talks with the Minister of Finance and Spokeswoman, María Jesús Montero (d), at the end of the first part of the plenary session for the entirety of the General State Budget Bill for the year 2021, in the 2020 Congress of Deputies. (E. Parra. POOL / EP)

ERC becomes the spokesman of the fight against ‘fiscal dumping’ in Madrid

“They would give us independence first instead of a fiscal pact”. It was the reaction of a close associate of Artur Mas after the meeting in Moncloa in September 2012 between the then president and Mariano Rajoy. Rajoy said no, Mas called elections and the independence process absorbed Catalan politics … But eight years are enough for some successes and many errors, and the account of the Government parties has ended up turning from the achievement of independence as the only political objective into becoming, in the case of ERC, accidental champions of fiscal harmonization on account of the struggle between PSOE and PP.

The verb harmonize is anathema in Catalonia, not for the rest of autonomies; Susana Díaz raised her voice in 2017

Without erasing the final objective, the management of the interim has difficult digestion among the most radicalized independence movement, but in the midst of the health, economic and social crisis, coffee for all does not taste so bad if the alternative is to die of thirst.

That is the ERC bet, and that is the paradigm shift in the negotiation of the PSOE budgets: part of the independence movement returns to the political playing field in Madrid. ERC has done so by propping up Pedro Sánchez’s legislature with its support for next year’s accounts, while Junts intends to convert the irrelevance of their votes in Madrid into a pro-independence virtue in Catalonia.

The verb harmonize is anathema in Catalan politics. It was in the governments of Jordi Pujol, in the tripartite – the Statute and a financing system were negotiated bilaterally, to which the rest of the communities joined – and even more so with Mas, Puigdemont and Torra. It was part of the vocabulary of the rest of the autonomous communities, always on the rise and against the “unsupportive Catalonia”.

Even Francisco Camps invented a statutory clause by which the Valencian Community could aspire to any competence obtained by another autonomous community with Catalonia in the spotlight. In May, Mónica Oltra, who fought against that PP, appealed from the Valencian vice presidency to the “Camps clause” to demand more funding during the pandemic and harmonize resources. The focus was already on Madrid and Valencia dared to open fire.

It was not the first time. Andalusia did it in January 2017 with Susana Díaz in the presidency of the Junta de Andalucía and María Jesús Montero as counsellor of Finance. Madrid had lowered taxes six times since 2005, Catalonia was consolidated as the autonomy with the highest tax burden and, in addition, it was already outside the multilateral bodies such as the regional conference of Presidents and the Council for Fiscal and Financial Policy.

The Madrid grievance comes from afar and the PP contained it with Cristóbal Montoro as Treasury Minister

Andreu Mas-Colell, greeted by Cristóbal Montoro, in the presence of the then Andalusian councilor, María Jesús Montero, during the last fiscal and financial policy council of 2015 (Emilia Gutiérrez)

So the grievance comes from afar, it did not speak Catalan, and it was the PP who contained it from Moncloa with Cristóbal Montoro piloting the Treasury. In February 2014, the report of the Comisión de Expertos para la Reforma del Sistema Tributario Español -among them the current governor of the Bank of Spain, Pablo Hernández Cos-, already proposed eliminating the wealth tax and harmonizing inheritance. In July 2017, another report from the Comisión de expertos para la revisión del modelo de financiación autonómica with Ángel de la Fuente, concluded that “it would be desirable to harmonize the taxable and payable bases of the taxes assigned in whole or in part”, restricting the regulatory capacity of the autonomies and introducing effective tax caps on assets and inheritance. Catalunya did not even appoint a representative on that commission. It was relying in the information provided by Guillem López-Casasnovas, proposed by the Balearic Islands. Puigdemont and Junqueras had fought over the inheritance tax and were conspiring on nothing else than the “referendum or referendum”.

 The Generalitat goes ahead from demanding a fiscal pact into the harmonization issue after going through the 1-O

The Community of Madrid is not branded as “unsupportive”. “Madrid is Spain within Spain”, proclaims its president, Isabel Díaz Ayuso, a national (fiscal) paradise that the rest of the communities, party discipline left aside, are no longer willing to tolerate.

With the pending financing reform and the socialist barons aligned, Minister Montero put the debate on fiscal harmonization on the budget negotiation table and ERC picked up the gauntlet by giving more weight to the left of the balance than to independence. The appointment of the committee of experts is bogged down between the Treasury and Moncloa and now Montero grants ERC the proposal of one of its members.

ERC becomes the spokesman in the fight against fiscal dumping, although the agreement became more explicit between the PSOE and Cs in 2016 in their failed attempt to form a government: a commission of experts for a tax reform, a tax on large fortunes, and harmonizing inheritance and patrimony “to end competition in both taxes by the autonomous communities”.

Cs now governs in Madrid, votes against the budget and asks to harmonize the Basque concert. The PNV, irritated by the prominence of Bildu, remains on the sidelines, clinging to the joker of the veto on any tax reform that Sánchez granted in exchange for its votes in the investiture. The aim is to prop up the debate for next year, and adding Catalonia to the socialist communities is the best start for Montero. Although the Generalitat just goes from demanding a fiscal pact to harmonization, after going through the 1-O.



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