The European Parliament asks for the deficit targets to be split “in a fair way” among government levels

Brussels (ACN).- The European Parliament approved a report on Wednesday indirectly asking the Spanish Government to relax the deficit targets for the Autonomous Communities for 2013 by splitting the deficit objectives in a fairer way among the different government levels. The report, approved by the People’s Party, the Socialists, the Liberals and the Greens, does not mention specific cases but insists that “fiscal consolidation efforts should be shared between the different administrations in a fair way, taking into account the services they provide”. Therefore, according to the Euro MPs, the Autonomous Communities’ deficit targets should correspond to their share of Spain’s total public spending and the importance of providing basic Welfare State services for the citizens. However, the Spanish Government is currently imposing  a deficit target of 0.7% for 2013 on the Autonomous governments, despite the fact that they exclusively manage the main basic services – such as healthcare, education and social policies – and more than 36% of Spain’s total public spending. In addition, the Catalan Government has even more powers – such as prisons and police – yet manages a greater proportion of public resources. Meanwhile, the Spanish Government has to meet a 3.8% deficit objective, despite managing only 50% of the total public spending. This means that the Spanish Government is keeping 84.5% of the 4.5% public deficit allowed by the European Union for the entire Spanish public sector this year for itself, while the Autonomous Communities only get 15.5%. The Catalan Government is currently asking for the redistribution of  the 4.5% deficit target allowed to Spain among the different government levels and the allocation of a 1.5% target for the Autonomous Communalities, corresponding to a third of the total deficit for 2013. However, the Spanish Government has refused the proposal.

Furthermore, the ‘Report on Public Finances in EMU – 2011 and 2012’, compiled by the Italian Conservative Alfredo Pallone, also insists that it is “concerned” that “decentralisation is financed predominantly through transfers from the central government and is not matched by sub-national responsibility on the revenue side”. This is in line with the Catalan Government’s claims for greater fiscal capacities and less dependence on the Spanish Government’s transfer of money that has previously been raised in Catalonia by the Spanish Executive through taxes. On top of this, the European Parliament’s non-binding resolution also states its “concern” that “in some Member States […]ministries may exist without concrete powers and tasks; these sub-sectors of government make the general administration more inefficient and profligate and should therefore be eliminated as part of the fiscal consolidation efforts”. Applying the resolution to Spain, the Spanish Government should eliminate two of its ministries, since almost all of their power has been transferred to the Autonomous Communities; they are the Ministry of Healthcare and that of Education and Culture. However, the Spanish Government is currently recentralising power in Education and it is trying to have the Catalan Government more dependant on money transfers from Madrid by suspending some of the Catalan Government’s fiscal measures and making deficit targets more difficult to reach, as the President of the Catalan Government, Artur Mas,  denounced today.

The Spanish Government hits Catalonia’s fiscal capacity and prevents it from earning €820 million

The day after the Spanish Constitutional Court suspended three fiscal measures approved by the Catalan Government by accepting an appeal from the Spanish Executive, the European Parliament has approved a resolution asking for the Autonomous Communities to be allowed greater fiscal capacity. The Spanish Government believes the Catalan initiatives were invading its own jurisdiction and managed to have them suspended for a five-month period, which could be extended further. The Catalan Government has calculated that the three measures combined would have represented €820 million revenue in 2013, which will not longer be in the budget. €500 million would correspond to the tax on bank deposits, €90 million would be directly raised by the drug prescription fee, €220 million would be saved from pharmaceutical spending by the demand reduction caused by the drug prescription fee and €10 million would be collected through judicial fees. Therefore, losing €820 million in one year makes it harder for Catalonia to meet the 0.7% deficit target imposed by Madrid, which represents €1.4 billion.

The Catalan President accuses Madrid of fiscal asphyxia for centralist reasons

The President of the Catalan Executive and leader of the Centre-Right Catalan Nationalist Coalition (CiU), Artur Mas, accused the Spanish Government of following a strategy to put the government he chairs against the ropes. According to Mas, Madrid’s final aim would be to have greater control over the Catalan Government’s finances by making it more dependent on the Spanish Executive’s transfers. In order to attain this objective, the Spanish Government is imposing strict deficit targets on the Catalan Executive and is also putting obstacles in the way of the new fiscal measures in order to provoke fiscal asphyxia. Such asphyxia would enable the Spanish Government to take any devolved power back and have greater control over the remaining Catalan Executive. This strategy would restrict Catalonia’s self-government and completely change the spirit of the Spanish Constitution and the Transition after the death of Franco, which were mostly based on two drives: democracy and decentralisation.

Eliminating “unnecessary defence expenditures” and “applying cost-benefit analyses to all infrastructures”

Besides, the European Parliament’s ‘Report on Public Finances in the EMU – 2011 and 2012’ is not only insisting on the elimination of ministries whose power has been transferred to regional governments, but it also “calls on Member States with budgetary problems to give priority to fiscal consolidation measures aimed at reducing unnecessary defence expenditures such as purchases of new and expensive military equipment”. In fact, while the Spanish Government is imposing strict budget reductions on the Autonomies, which exclusively manage healthcare, education and social policies, it is keeping many of its military equipment programs and purchase orders, such as the 250 Leopard tanks that have been bought to Germany. In addition, it is not eliminating ministries with almost no power, such as ‘Healthcare’ and ‘Education and Culture’.

In addition, the Spanish Government is continuing to build the High-Speed Railway in rural zones and expanding what is already the world’s second largest High-Speed Train network today, after China. The European Parliament report “considers that in order to attain balanced public finances for the medium and long term, it is important to apply cost-benefit analyses to all infrastructure projects with significant budgetary weight”. However, the Spanish Government has not prioritised certain essential infrastructures with a high cost-benefit ratio, such as the Mediterranean Railway Corridor, which could connect Central and Northern Europe with Gibraltar and all Spain’s Mediterranean ports and industrial centres. Instead, Madrid is insisting on building this key infrastructure for Europe’s economy in parallel with many other expensive projects with very low cost-benefit ratios, which result in no priorities being set and the construction of the most important projects being delayed since not enough funds are available.