These days, both with preliminary work and with the preparation of the plenary session of the Council of Fiscal and Financial Policy, the debate on the forgiveness of the debt of the autonomous communities and the new system of autonomous financing begins. We heard about the first one on Monday.; the second one will be seen. Some comments on this.
The debt forgiveness, agreed in the PSOE-ERC agreement by Catalonia in terms of money, seems to be reoriented by all the autonomous communities in the form of a percentage settlement. It is obvious that doing it in percentage rewards the most indebted autonomous communities, which will raise a lot of controversy. The Balearic Islands are situated in an intermediate section: they have arguments both to be in favour, because they continue with a debt in relation to the GDP that doubles the consolidation scenarios, and they can do well, and to be against it, due to the fact that in recent times they have not accumulated as many deficits as other autonomous communities such as the Valencian Country and Catalonia. current, already the good progress of the collection for Patrimonial Transfers–. By the way, let me say, again, something I have reiterated: everything that the PP government forgives in direct taxes (tax relief, no surcharges and the elimination of wealth tax and inheritance tax) is recovered through indirect taxes (VAT and special taxes such as shared taxes, and property transfers as its own tax); and thus it replaces direct taxes, which should be progressive, with others, indirect taxes, which we know are regressive and which, in proportion, are paid mostly by the poorest population groups.
The battle of arguments that the forgiveness will provoke, with the demand that resources be applied to debt amortization for a potential return of the communities to the capital markets, will be more like political smoke. We all know that, whether it absorbs it or not, that debt has always been the State's and is discounted. The display of a ratio of own debt / GDP of the autonomous communities will not confuse anyone either. A minor child (without significant income of his own, since he lives off his father's weekly allowance) has no credibility other than the solvency of the person he depends on. Without the capacity for financing of his own, hence the reform of financing that Catalonia is asking for, alleviating the burden of risk will not fool the capital market (unlike the two Basque communities with an agreement or convention). In addition, with the low level of interest rates that the forgivable debt currently supports, the margin for new expenditure will be relatively small, since the financial costs that will not be subtracted in the regional transfers will not be significant. I have always thought that the financial cost that the State assumed of this regional debt, even when the high rates did make it significant, was nothing more than a wedge to put downward pressure on the demand for more resources that did not prevent the increase in deficits. On the other hand, at this time, using resources to pay off outstanding debt does not seem the most sensible strategy, at a time when short-term interests (as, on the other hand, are almost everything in politics) are sufficiently low.
As for the proposals for reform of ordinary financing in the common regime, the document in circulation insists on the exhausted path of distributing resources according to the estimate of spending needs by adjusted equivalent population: a little Frankenstein monster made of estimates, approximations, weights and variables ad hoc which do not have an acceptable technical resolution. More of the same on a path that is known to lead nowhere, and for which insularity (fixed costs, amount, measurement, weighting), lower relative income (Valencia) or the effects of the reception of newly arrived population (Catalonia) - we will see how they turn out, among other innovations!
All this, combined with the war against Catalan singularity by the opposition parties, among which are the current Balearic and Valencian governments. However, a comprehensive vision, and aligned with that of previous governments (Balearic and Valencian – alas, the lack of consensus shown by some parliaments on food issues! –), would be to support the path that Catalonia wants to open of greater tax autonomy, more self-government and greater assumption of responsibilities. The PSOE-ERC agreement is signed as a way of remedying the discontent of the great Catalan parliamentary and citizen majority regarding current financing. The objective of the Islands or the Valencian Community, beyond being in the middle of the financing, is not sufficiently defined. The Catalan way is presented at least as a political solution of realignment that we analysts should respect (it is not up to us to judge politics except as citizens), ensuring that it is feasible with the greatest economic rationality, open to other autonomous communities that want to follow it, and never excluding anyone. Thus, for all those autonomous communities that do not have the singularity Basque or Madrid, perhaps the privilege In the end, Catalonia will be the driving force behind a new, non-exclusive financing route, assuming the costs of change so that others can join in one day.
