Catalan parties welcome Rajoy’s rectification in publishing fiscal balances after all

Barcelona (ACN).- After a great controversy and outraged reaction from businesspeople, politicians and academics, the Spanish Government has amended its previous decision and on Tuesday evening it announced that it will publish the so-called fiscal balances after all. They measure Catalonia’s contribution to the rest of Spain and traditionally have shown that an average of 8% of the Catalan GDP is given away, equivalent to 6 Marshall Plans since 1986. There is an extremely wide consensus in Catalonia, regardless of whether people support independence or not, that this contribution is totally excessive and that it damages the Catalan economy and public services, which are under-budgeted. On Wednesday, Catalan parties welcomed the Spanish Government’s latest decision, although they have strongly criticised “the confusion” created by the Spanish Finance Minister, Cristóbal Montoro. In addition they have warned Montoro that they will be vigilant and they hope figures will not be altered in order to support the Spanish Government’s interests.

Ten days ago, Montoro said he would not publish the fiscal balances since they were “used to foster Catalonia’s independence claims”. However, Esperanza Aguirre, the former President of Madrid Region and one of the main leaders of the People’s Party (PP), stated on Tuesday she “could not understand how the government of transparency could now refuse to publish the fiscal balances”. On Tuesday evening, the Spanish Finance Ministry announced a new formula which shows that Catalonia has an annual fiscal deficit of €11 billion, around 5% of its GDP. This is far from the previous calculations made by the Spanish Government based on several calculation formulae used at international level and agreed among several independent university experts. However, Montoro’s formula is backed by a university expert, Angel de la Fuente, who has built his career in proposing alternative calculation methods of the fiscal balances that indicated that Catalonia’s fiscal deficit is much lower than the commonly-agreed figures show. Furthermore, the Finance Ministry stated that from Tuesday the Autonomous Community governments have all the data available to calculate their own fiscal balances. This was a major demand of the Catalan Executive, since the data should have been available several weeks ago.

What are the fiscal balances?

The fiscal balances are a financial instrument that shows how much money the citizens and companies from a specific territory give to a central government and how much of this money comes back in form of funds, investments and services. Previous studies showed that Catalonia has been giving away an average of 8% of its GDP each year between 1986 and 2010, which represents 6 times the entire Marshall Plan in comparable currencies (more than €300 billion in 25 years). The only fiscal balances published by the Spanish Executive, issued in 2008 with data from 2005, showed a fiscal deficit for Catalonia of between 6.38% and 8.70% of its GDP that year (depending on the calculation formula), representing between €13.1 billion and €17.8 billion in today’s money. As a reference, the Catalan Government’s entire budget for 2014 amounts €29.3 billion. The IMF strongly recommends that fiscal deficit should not exceed 4% of its GDP in order not to seriously harm their economy.

The Spanish Government initially hid the figures because they were used to support independence

The Spanish Government was supposed to publish the fiscal balances in December but a month later it announced that it would not do so, and instead it would publish “regionalised public figures” with a totally different calculation formula. The reason: fiscal balances are “used to foster Catalonia’s independence”, stated Montoro. “They are wrongly used”, he said. In the days after his announcement, the main businesspeople in Catalonia complained vociferously about it, since it seemed that the Spanish Government was trying to hide Catalonia’s fiscal contribution to the rest of Spain and the reality that the Catalan economy and institutions suffer from a lack of investment from the Spanish Government, which damages business competitiveness and the quality of public services.

After 10 days of complaints, even from members of the People’s Party (PP) – which runs the Spanish Government – the Ministry run by Montoro announced the publication of the fiscal balances. On Tuesday evening it issued a press release saying that the fiscal balances would be published, although it did not specify the formulae used to calculate them. However, the “regionalised public figures”, which calculate spending per inhabitant in a given territory, will also be issued.

Catalan parties asked for the figures not to be altered

The Centre-Right Catalan Nationalist Coalition (CiU) asked Montoro “not to play with figures” and not to alter “the figures in order to obtain the results he wants”. The CiU emphasised that the formula was agreed “years ago” by a group of independent academics. “A series of calculation methods” were agreed and “now they have to be respected”. “Numbers are clear and show the fiscal plundering of Catalonia”, stressed the CiU. Otherwise, if the Spanish Government uses a different formula “it will lose even more credibility”. The Left-Wing Catalan Independence Party (ERC) said that Montoro “doesn’t know what else to do in order to deny fiscal plundering [of Catalonia]”. They accused the Spanish Minister of “downplaying evidence brought by the fiscal balances”. The ERC highlighted that Montoro “contradicts himself” and creates “confusion” on the issue.

The Catalan Socialist Party (PSC) accused Montoro of creating “tension, outrage and insecurity” by saying he would not publish the fiscal balances. The PSC regretted that the Spanish Government “is inventing an entire new system” in order to show results that are more in line with their partisan interests. Furthermore, the PSC said “it was not by chance” that Montoro is putting things right after the intervention of Aguirre, who has for a long time been considered Rajoy’s rival within the PP. The Catalan Green Socialist and Communist Coalition (ICV-EUiA) welcomed the fact that the Spanish Government is correcting “its mistake” and abandoning the “inconceivable” attitude of hiding the fiscal balances. The ICV-EUiA asked for “transparent data”, using “all the calculation methods”.

The PP stated on Wednesday that Montoro “had never said” he would not publish the fiscal balances. “There hasn’t been a rectification”, said the PP. Furthermore, they insisted that the Spanish Government “has no interest in hiding data”. Finally, the anti-Catalan nationalism party Ciutadans (C’s) welcomed Montoro’s “rectification” since “it is better now than never”. The C’s emphasised that “transparency” is “the best way to dismantle the manipulation” of those supporting independence.