The Spanish Government imposes an €8 billion budget adjustment on the Autonomous Communities in 2014 and 2015

Barcelona (ACN).- The Spanish Government has sent a Budget Plan to the European Commission on Thursday, following the new rules giving Brussels’ greater control on Member State finances. The plan’s scope includes all government levels in Spain. In the plan, the Spanish Government imposes a global budget adjustment of €8 billion on the Autonomous Community governments, including Catalonia’s, to be achieved within the next two years. €2.14 billion would come from increasing revenue next year, since Madrid considers that the Autonomous Communities can still increase their own taxes, particularly those linked to the environment. €1.93 billion would come from further budget cuts. This would total €4.07 billion in 2014, which would roughly be repeated in 2015. The Spanish Finance Ministry said that the measures were already foreseen in the 2013-2016 Budget Stability Plan. The Vice President of the Catalan Government, Joana Ortega, pointed out that Catalonia “has already made all the needed adjustments”.

The Catalan Government protests against this adjustment

After the plan sent to Brussels had been announced, the Vice President of the Catalan Government highlighted that the Catalan Government cannot implement further budget cuts “because they would affect the core of the Welfare State”, since it exclusively manages healthcare, education and social policies. Ortega emphasised that Catalonia “has already made all the needed adjustments”. In addition, she stated that it is the Spanish Government that has to undertake further adjustment and “stop centrifuging the [austerity] effort towards the Autonomous Communities”.

The Spanish Government sends a plan to Brussels announcing a €8 billion adjustment

Instead of presenting the plan first to the Autonomous Communities and negotiating with them, the Spanish Government sent a document to Brussels stating that the regional governments in Spain will undertake an €8 billion adjustment between 2014 and 2015. The document states that in 2014, measures will be adopted to adjust €4.068 billion. The Spanish Government considers “there is a margin” for the Autonomous Communities to increase their own taxes and the part of those shared with the Spanish Government. However, some of these taxes, such as Income Tax in Catalonia, which is one of the highest in the world for the highest earners, are already at their maximum. The Spanish Government believes nevertheless that the Autonomies could cash €2.142 billion in during 2014, an amount that could roughly be repeated in 2015. In addition, €1.927 billion would be adjusted through “a greater control on the regular spending on assets and services”, which means carrying out further budget cuts. For 2015, the Spanish Government foresees similar figures. However, it recognises that they are still fine tuning the details of the measures for 2014 and, therefore, also for 2015.