"The common system is a tax hell": experts' warnings on the reform of financing

BarcelonaWhile the group of experts of the Government continues to work on the singular financing, the debate on the new model follows its own path in the Parliament of Catalonia. The Commission of Economy and Finance of the Catalan chamber has summoned, this Wednesday, experts, employers and unions to ask them what they think the new financing model should be and to hear their diagnosis of the fiscal deficit, which the previous Government estimated at 22,000 million euros per year. The verdict of the jurists and economists who have participated has been unanimous: nothing, neither the Constitution nor European legislation, prevents Catalonia from having a singular model, nor from leaving the common regime. There have even been speakers who have specifically recommended that political groups pressure to leave the LOFCA as a solution to resolve the chronic underfunding of the country. For the moment, the PSC has not clarified whether it would be willing and He relies on negotiations that will be opened once the opinion of the group of experts from the Economy is on the table., which they expect to have available between May and June. For now, the commitment is that Catalonia can collect and manage all taxes and contribute to inter-territorial solidarity and state spending through two funds.. It remains to be seen how this will materialise.

"It is very important to leave the common regime, it is a fiscal hell and the General Council of Fiscal and Financial Policy, in more prosaic words, is a big chicken coop," said the professor of Economics at UPF, Guillem López Casasnovas, before the commission. The same recommendation was made by the jurist and former Minister of the Presidency, Francesc Homs, who argued that the Constitution does not predetermine the financing model nor, therefore, distinguish between the common regime and the foral regime. The constitutionalist Carles Viver Pi-Sunyer, former director of the Institute for Self-Government Studies, has gone a step further and has claimed that, if there is political will, it would even be possible to agree on a Basque-style agreement for Catalonia: the difference with the Basque quota is that it would have legal and not constitutional status. For López Casasnovas, the agreement that PSC and ERC presented at the time is not a concert, but it could be a breath of fresh air for the Generalitat's accounts with another 5 billion for the Catalan budget. However, it is not enough to solve the problem of the fiscal deficit.

The lawyers have also agreed that the reform of the singular financing cannot be carried out only from the Statute or through a law of transfer of taxes or powers. Their recommendation has been that the new model culminates with a reform of the LOFCA, the path that they consider legally most protected against a possible appeal of unconstitutionality by the PP, Vox or even some of the autonomous communities governed by the socialists who have raised their eyebrows with the singular financing.

Lack of transparency

For more than three hours, representatives of the Chamber of Commerce, the College of Economists, Foment del Treball, UGT and CCOO also paraded before the commission. They all agreed that the new model must put limits on inter-territorial solidarity and incorporate the principle of ordinality so that Catalonia does not lose positions in the distribution of resources through regional financing. The appearances have taken place at the request of several groups.

Experts and social agents have agreed in pointing out another of the big issues regarding the financing model: the lack of capacity of the Generalitat to decide on taxes (and not only on spending) and the lack of transparency of the current system. "We ask that the necessary information be made public to have clear fiscal balances of all the communities and that the data on territorialized investment be published," said the dean of the College of Economists, Carles Puig de Travy. It is a commitment that the PSC Government has had pending since the end of the year, when it did not make the balances public, but guaranteed that it would do so in the coming months. The ERC deputy, Joan Ignasi Elena, also wanted to emphasize this during the groups' turn to speak: "Without transparency there is no trust," he warned.

Elena has defended the agreement with the PSC in the face of criticism from Junts, which has reproached her for having accepted a model that, according to deputy Josep Rius, the experts themselves recognize is not an economic agreement that gives Catalonia the key to the fund. Despite criticizing the agreement, the PP has admitted that a reform of the autonomous financing is necessary: "But does Catalonia need an agreement? Obviously not," said the Catalan PP spokesperson, Juan Fernández. Vox has compared Spain to a "community of neighbors" where each one must pay a fee. Salvador Guillermo, from Fomento, has not replied that even in the communities of neighbors there are various forms of financing.

The debate has also generated cross-accusations about taxation and, in particular, the neoliberal model of the PP in the Community of Madrid. The Comuns, PSC and CUP have attacked tax reductions and have defended, in line with CCOO and UGT, that the reform of financing should allow for more resources to invest in public services, but not to reduce tax pressure.