Catalan Finance Minister accuses Rajoy of sidelining and homogenising the Autonomous Communities

Barcelona (ACN).- Andreu Mas-Colell, Catalan Finance Minister, accused the Spanish Government of aiming “to undo” the system of Autonomous Communities. In a live interview at the Catalan Public Television Broadcaster on Friday morning, he also expressed his fear that the so-called ‘coffee for all’ system [the generalised devolution of the early 1980s that shaped the 17 Autonomous Communities in Spain] will become a ‘decaffeinated coffee’ system, implemented ‘in depth’. With this play on words, Mas-Colell was referring to a deep recentralisation and homogenisation process. Furthermore, the former professor of Economics at Harvard and Berkley, denounced “the budget treatment” that the Spanish Government gives to Catalonia as “totally unfair”. Mas-Colell highlighted the issue just as the Spanish Government is about to publish the so-called fiscal balances between Catalonia and the Spanish State, which is the difference between the taxes paid by Catalan citizens and companies and the money received for services, infrastructure and investments. In this vein, he proposed that an international and independent body should calculate those fiscal balances, in order to increase transparency. Apart from this, Mas-Colell said that he is not expecting to meet the Spanish Finance Minister Cristóbal Montoro, who is in Barcelona for a People’s Party meeting, this weekend.

Catalonia has a perpetual fiscal deficit

Despite manifold requests over many years the Spanish Government has only published the so-called fiscal balances on one occasion. Back in 2008, with data from 2005, the Spanish Finance Ministry stated that Catalonia had a fiscal deficit of between 6.38% and 8.70% of its GDP that year, depending on the calculation method. This represents a fiscal deficit of between €13 billion and €17.5 billion. The Catalan Government published a wider study in 2012 with data until 2009, showing that since 1986, Catalonia had transferred each year an average of 8% of its GDP for services, infrastructure and investments made in the rest of Spain using the money-flow formula. This accounts for an average of €16 billion per year. In terms of taxes, 43% of the money raised in taxes in Catalonia is spent outside of it. Furthermore, in May 2013, the Catalan Government published the fiscal balances for 2010, showing an 8.5% fiscal deficit.

The International Monetary Fund discourages excessive fiscal deficits as it regards them as unfair and unsustainable. Catalonia is the European region with the highest accumulated fiscal deficit over decades. On top of this, Catalonia has the highest fiscal pressure in Spain, while public services such as education or healthcare receive less money per inhabitant than in other parts of Spain. This makes the Catalan public sector, including the Catalan Government, which exclusively manages education, healthcare and social policies in Catalonia, under-budgeted.

There are many indicators showing this reality; one of them is the number of public employees. In January 2013, there were 40.7 civil servants for every 1,000 inhabitants in Catalonia, while the Spanish average was 57.4 and it was as high as 79.6 in the Autonomous Community of Extremadura. In Catalonia 11.1% of all the people with a job work in the public sector. The figure at Spanish level rises to 16.4%. This means that for every 2 public employees in Catalonia, in the whole of Spain there are 3 of them. In addition, in some areas of Spain, such as Extremadura, the figure represents 26.7%.

The Catalan Government depends on green light from Madrid

Andreu Mas-Colell regretted that the Catalan Government will not have access to international financial markets in 2014 either, since the Spanish Executive continues to restrict this access. For this reason, the Catalan Executive is totally dependant on the Spanish Government’s loans, which are presented to public opinion as financial assistance from the Madrid authorities. “It is obvious they want to sideline us”, stated Mas-Colell. However, he added that “when our creditors know we can pay back the loans, there will not be any problem”. Meanwhile, Catalonia will still be dependent on the money arriving from Madrid. Furthermore, he said that, currently, “the split of fiscal interests within Spain is clearly biased towards the Spanish Government”, which harms Catalan interests.