Rajoy to partially compensate Catalonia for the tax on bank deposits

Madrid (ACN).- On Wednesday the Spanish Prime Minister, Mariano Rajoy, confirmed that “in theory” the Spanish Government will implement a tax on bank deposits in 2014 – taxing the global amount of deposits and not individual ones. He also said that the revenue from this tax will be transferred to the Autonomous Communities. Furthermore, Rajoy stated that the Spanish Executive is “studying” compensating the Catalan Government financially for not allowing it to implement such a tax in 2013. Catalonia approved a tax on bank deposits in December 2012 to be implemented in 2013, aiming to collect €500 million in its first year. However the Spanish Executive approved its own tax a few days later, but at a 0% rate, de facto cancelling Catalonia’s. When Madrid approves the same tax as an Autonomous Community it is legally obliged to compensate the regional government. In this case, the Spanish Government has been compensating Andalusia, Extremadura and the Canaries, which had approved such a tax earlier than Catalonia. However, it refused to compensate the Catalan Government, which heavily criticised the decision and accused Rajoy of economically asphyxiating the Catalan finances.

On Wednesday morning, before the Spanish Parliament, PM Rajoy answered a question from Josep Antoni Duran i Lleida, Spokesperson of the Centre-Right Catalan Nationalist Coalition (CiU), which runs the Catalan Government. Duran asked him whether the Spanish Executive will compensate Catalonia for the tax on bank deposits for 2013 and for 2014. Rajoy answered that “in theory”, in the 2014 Spanish Budget, this tax will “be approved as a State tax [whose revenue is] lent to the Autonomous Communities”. Therefore, next year the Catalan Government will have the money from this fiscal measure at its disposal.

The Spanish tax is likely to be 10 times lower than the Catalan

However, it is likely that the revenue will be significantly lower than the €500 million initially expected. The Catalan Government had anticipated implementing a sliding scale between 0.3% and 0.5%, with several exceptions and limitations. However, the Spanish Finance Minister disclosed yesterday that this tax could be included in next year’s budget with a rate around 0.03% or 0.05%, some 10 times lower than Catalonia’s intention. Rajoy did not confirm such rates; he did not discuss them.

In addition, Duran i Lleida asked Rajoy to compensate Catalonia for the revenue not collected by this tax in 2013. The Spanish PM said that they are “studying” the issue. In 2013, the Spanish Government has compensated 3 other Autonomous Communities for this tax, arguing that they had approved it earlier than Catalonia and that it was already being implemented. Catalonia’s tax was approved on the 18^th December 2012, to be implemented as from the 1^st of January 2013. However the Spanish Executive approved its own tax at a 0% rate on the 27^th December 2012, de facto cancelling Catalonia’s. In addition, it took the Catalan tax to the Constitutional Court, which temporarily suspended it. However, in May, the Court temporarily allowed the tax, until it issues a definitive sentence (a process that can take years).