Catalonia’s Tax Administration is launched to guarantee self-government

Barcelona (ACN).- The new Tax Administration of Catalonia (called ‘Tributs de Catalunya’) has been launched on Thursday in a ceremony chaired by Artur Mas, the President of the Catalan Government. Mas highlighted that “all of this is not against the Spanish State” but it is “an investment for a better Catalonia”. The new body was created from merging the existing Catalan Government’s Tax Agency – which had extremely limited powers – and the ones of the four Provincial Councils (Barcelona, Girona, Lleida and Tarragona). This is the formula agreed upon in September 2012, aiming to build “a state structure” that would ultimately be able to collect all the taxes generated in Catalonia if needed. However, a Tax Administration was already foreseen in the Catalan Statute of Autonomy approved by the Spanish Parliament and the Catalan people through a binding referendum in 2006. The new body kicks off this Thursday with 53 branches. Most of them were branches of the Provincial Councils’ tax agencies until this morning. Nonetheless, their activity in the first few weeks will not experience any significant changes since they will mostly deal with municipal taxes anyway. However, the Tax Administration will gradually grow in the coming months until it will reach some 200 branches spread throughout the country. Its mid-term goal is to become a single-access point to pay taxes and fees to municipalities, Provincial Councils, Catalan Government and the Spanish Executive, being able to collect all the taxes generated in the country. The parties opposing Catalonia’s Self-determination, including the Catalan Socialist Party (PSC) – which was the leading force behind the 2006 Statute foreseeing such a Tax Administration, have criticised the project. According to them, the new body is a structure for Catalonia’s independence from Spain, which is another obstacle against the talks between Catalan and Spanish authorities. However, the majority of Catalan parties, which support self-determination, welcomed the new agency.

Needed to counteract the Spanish Government’s recentralisation and fiscal “asphyxia”

The new body aims to guarantee Catalonia’s fiscal sufficiency, as a response to the Spanish Government’s recentralisation offensive and tight “control” and “strangulation of the Catalan Executive’s finances”, as explained by Artur Mas. “We are in the middle of a centralist urge regarding the approval of certain laws”, “which damage our self-government”, he stated. “The Catalan Government’s financial dependency from the Spanish Government, from State’s central institutions, combined with [these] laws […] is lethal for the exercise of our self-government”, he added. “Fiscal asphyxia is a very effective way to reduce [Catalonia’s] self-government”, pointed out Mas. In fact, the Catalan President regretted that creating such an agency had not been decided earlier. According to him, it was a mistake for Catalan parties not to have prioritised Catalonia’s fiscal autonomy in the last 30 years.

A wide majority of Catalans support the creation of such an agency

The Tax Administration is the main structure of Catalonia’s own Treasury. In the event of becoming an independent state, Catalonia would need such a tax agency anyway. However, in the event of staying within Spain and obtaining the so-called Fiscal Agreement, this body would also be needed since this relationship formula foresees that Catalonia would collect all its taxes, as the Basque Country and Navarra already do. According to polls, the support for independence is between 45% and 63% of the total population. However, the support from those who want Catalonia to collect all its taxes would reach between 75% and 80%, including the main business association, which is reluctant to independence.

A single-access point to pay taxes

In this Thursday’s presentation, not many details have been disclosed about how exactly the new Tax Administration will work. However, a new website has been introduced: tributs.cat. Through this online portal Catalan citizens and companies will be able to pay the taxes and fees to the five public administrations behind the new agency: the Catalan Government and the Provincial Councils of Barcelona, Girona, Lleida and Tarragona. Moreover, users will also be able to pay taxes and fees to the Spanish Government. It will therefore act as a single-access point to pay taxes. It starts with 53 branches and some 1,500 workers (coming from the existing bodies), but it will gradually increase its capacities.

The new Tax Administration’s main pillars are the fight against fiscal fraud and being a public body close to the citizens. If the parliamentary agreement between the governing Centre-Right Catalan Nationalist Coalition (CiU) and the opposition Left-Wing Catalan Independence Party (ERC) is respected, the new Tax Administration should be ready to collect all the taxes in Catalonia by next July. Its budget for 2014 reaches €29 million and the Catalan Government has put €6 additional million aside to hire some 30 additional tax technicians. However, such a budget would be insufficient to collect all the taxes generated in Catalonia.

The embryo of a larger agency

A report issued by the Catalan Government’s advisory Council for the National Transition stated that a tax agency taking care of all Catalonia’s taxation and fees would need an operational budget of minimum €400 million, while ideally it should reach €700 million to perform with the highest international standards and effectiveness. Furthermore, it should have between 7,000 and 8,000 workers. Therefore, the new body launched this Thursday would still be an embryo of such an agency. However, the current objective is to built the basis and gather the experience and knowledge to be ready to quickly implement the project when the time comes.