The Constitutional Court halts Catalonia’s drug prescription fee, bank deposit tax and judicial fees

Madrid (ACN).- On Tuesday, the Constitutional Court accepted the Spanish Government’s appeal against three measures adopted by the Catalan Executive in order to balance its budget and meet the strict deficit targets. In addition, the Court has temporarily put them on hold for a five-month period – which could be further extended – as a cautionary measure, starting immediately. The measures suspended are the drug prescription fee, the new fees for justice administration and the tax on bank deposits approved by the Catalan Government. The drug prescription fee was one of the main initiatives introduced to reduce the deficit by decreasing public spending on medicines (by reducing the demand) and by bringing in new revenue. In the first 6 months, the drug prescription fee generated a €46-million revenue and, by the end of November, it had reduced drug spending in Catalonia by 23.9% compared to the previous year. This measure and the judicial fees were negotiated last spring between the Centre-Right Catalan Nationalist Coalition (CiU), which runs the Catalan Government, and the People’s Party (PP), which runs the Spanish Executive. The third measure – the tax on bank deposits – was approved less than a month ago within the context of the talks to set a parliamentary stability agreement between the CiU and the Left-Wing Catalan Independence Party (ERC). In any case, the Spanish Government now believes that the measures invade its own powers, “break market unity” and go against the principle of “equality for all Spaniards”. For these reasons, following talks with the Catalan Government about changing the measures for the last three months, it decided to present the appeal in December. The Spanish Government’s objection to the taxes was explicit after Catalonia’s self-determination claims were put upfront of the political agenda. After hearing about the news, the Catalan Executive stated that it will appeal the decision to temporarily suspend the measures as it believes they are in line with the Constitution and they are within its own jurisdiction. In addition, the Catalan Government’s Spokesperson emphasised how the Spanish Executive will explain the European Union it is suspending measures to reduce public deficit. Left-wing opposition parties in Catalonia have celebrated the suspension although they do not share the Spanish Government’s interpretation and they believe the Catalan Government should have the power to approve such measures. However, they consider the measures to be “unfair” and they wish that other initiatives had been adopted in order to reduce the deficit. Chemists have stated that thay are ready to immediately eliminate the fee, once they receive the official notification, since it is easy to do via centralised software.

The Spanish Constitutional Court has accepted the appeal presented by the Spanish Government in December against three measures adopted by the Catalan Government to reduce its own deficit: the drug prescription fee, the judicial fees and the tax on bank deposits. The Spokesperson for the Catalan Executive and Minister for the Presidency, Francesc Homs, lamented that the Spanish Government is considering “every measure adopted by the Catalan Executive to be unconstitutional”, using “the Constitutional Court appeals in an interested and partisan way”. Homs was indirectly implying that the Spanish Government is campaigning against the measures for political reasons, going against Catalonia’s self-government and pushing for a centralist agenda. “One day they will declare that it is unconstitutional to breath in Catalan”, he said. Furthermore, Homs wondered how the Spanish Government will explain to the European Union that it is suspending measures that had been implemented with the aim of reducing public deficit.

The drug prescription fee goes against the principle of “equality for all Spaniards”

The Spanish Executive decided that the drug prescription fee approved in Catalonia was invading its power to rule on pharmaceutical products. On the contrary, the Catalan Government – which is called the Generalitat – believes they can approve such measure as they exclusively manage the drug prescription system, as Francesc Homs explained on Tuesday. Furthermore, besides the jurisdiction appreciation, the Spanish Government believes the measure makes residents in Catalonia pay more for their medicine than the rest of the Spanish citizens and therefore it goes against the principle of “equality for all Spaniards”, as the Spanish Minister for Health, Ana Mato, stated while celebrating the Constitutional Court’s decision. In addition, since the Spanish Government increased the share citizens have to pay for partially-subsidised drugs – a measure adopted later than the Generalitat’s initiative –, the Spanish Executive believes that Catalonia’s drug prescription fee should be abolished as Catalans are affected by two fiscal measures for the same product.

€45.7 million was earned by the drug prescription fee and drug spending was reduced by 23.9%

The drug prescription fee brought in €45.7 million in 6 months. In addition, drug spending in Catalonia in November had been reduced by 23.9% compared to the previous year, because of this measure and the one introduced by the Spanish Government. The Catalan Executive initiative was implemented on the 23^rd of June, after having been approved by the governing CiU with the indirect support of the People’s Party – which runs the Spanish Government – in the Catalan Parliament on the 20^th of March. In addition, it had previously been validated by the Catalan Council of Constitutional Guarantees (CGE), an advisory body to the Generalitat on Constitutional affairs, on the 6^th of March. The measure meant that the Catalans had to pay a one-euro fee for each drug prescription, with a maximum of 60 euros per year and with many exceptions for people with chronic diseases, on low incomes and pensioners [for details on the measure, please refer to this article].

However, six months after its implementation, in the middle of the clash between the Spanish and Catalan nationalisms over Catalonia’s right to self-determination, the Spanish Government brought the measure to the Constitutional Court. The appeal put an end to the talks held by both executives over the last few months to modify such measures.

Most of the left-wing parties celebrate the suspension but state that Catalonia should have the power to rule on these matters

The left-wing opposition parties in Catalonia have been very vocal against the drug prescription fee approved by the CiU and the PP. Therefore, they celebrated its temporary suspension. However, most of them do not agree with the Spanish Government’s reasoning. The Left-Wing Independence Party (ERC), the Catalan Green Socialist and Communist Coalition (ICV-EUiA) and the radical left-wing and independence party CUP stated that the Catalan Government has the power to decide on such matters, although they do not support adopting this measure. The ERC, which is now giving parliamentary support to the CiU, stated they have been asking the Catalan Government to make the measure “more flexible” as they believe it is currently “unfair” as it affects “the most vulnerable people”. However, the ERC pushed the Catalan Government to defend its own “fiscal capacity” and therefore appeal the Constitutional Court’s decision to temporarily suspend the measure. The ICV-EUiA welcomed the suspension of such “an unfair and anti-social measure”. The CUP lamented the Spanish Government’s interference in Catalan politics but welcomed the suspension as it will enable them to re-launch the debate on the measure as they have been demonstrating against it over the last months.

The Catalan Socialist Party (PSC), which defends Spanish unity but also Catalonia’s right to self-determination, stated that the Catalan Government should have more power over taxation in order to decide whether a measure such as this one should be implemented or not.

The Constitutional Court has also suspended the judicial fees and the tax on bank deposits

Besides the drug prescription fees, the Constitutional Court has also suspended the judicial fees and the tax on bank deposits. The Spanish Government appealed both measures because it is already adopting changes affecting judicial fees and bank deposits, and the Autonomous Communities cannot tax areas that have already been taxed by the Spanish Executive. If the Autonomous Community had implemented the taxes earlier, the Spanish Government’s rule would prevail but it would have to compensate the other government for the revenue it would no longer earn.

The Catalan Government was considering creating a tax on bank deposits as this was one of the petitions from the ERC. When it was known the Spanish Government was about to approve its own at a 0% rate in order to prevent the Autonomous Communities from approving their own measure, while de facto not implementing the tax, the Catalan Government rushed to create its own tax on bank deposits earlier, in order to receive at least compensation. However, the Spanish Government considers the tax to be unconstitutional as it was already in the process of approving the measure. In addition, the Catalan Government approved it via a decree while being in an acting position (since it was approved between the elections and the new term’s inauguration). On top of this, Madrid believes that “it breaks the market unity” in Spain, although other Autonomous Communities have such tax since years ago.

Regarding the judicial fees, the Catalan Government implemented them on the 2^nd of May but the Spanish Government has its own fees in place and is planning to create new ones. Therefore, the Spanish Executive is appealing in order to abolish what they consider to be “a double taxation” on the same service.