“The time of cutbacks is over”, says Catalan Minister for Economy after presenting 2017 budget

Barcelona (CNA).- “This is the best budget possible”, Catalan Vice President and Minister for Economy and Tax Office, Oriol Junqueras, assured right after presenting the bill to the Parliament’s Bureau this Tuesday. “The time of cutbacks is over”, he assured and emphasised that the budget for 2017 has been enhanced in comparison to the previous one “both as a whole and in each department”. It is also the most social-oriented budget ever. Indeed, more than 74% of the bill for 2017 is allocated for social expenditure and €1.1 billion more has been allocated for this purpose in comparison the budget for 2015, which had to be extended for 2016. In particular, the Health System with €8.7 billion and Education and Universities with €5.5 billion are the areas with the highest amounts allocated. On Wednesday, the different groups in the Catalan Chamber will be able to present appeals to the bill and the whole project will be discussed on the 20th of December.

The budget for 2017 increases by €1.52 billion the total expenditure in comparison to the bill for 2015 and most of this increase, €1.17 billion, will be allocated to social expenditure. In total, the amount allocated for social purposes amounts to €17,831.8 million. This figure is also €344.9 million higher than that presented by Junqueras in June 2016 and later vetoed by radical left pro-independence CUP, which led to the extension of the budget for 2015 to the current year.  

The Health System and Education, the main areas of investment

The overall weighting of the social expenditure in the bill for 2017 is 74.7%. Regarding the distribution, the bill allocates €8.7 billion to the Health System, which is €408.4 million more than the amount allocated in the budget for 2015 and €100.4 million in comparison to the budget for 2016 that was rejected.

Although he admitted that the investment in the Health System is not as high as that of 2010, “it is higher than that of the budgets from 2012 onwards” and even “higher than that allocated in 2007, before the economic crisis”.

Education is the other main area in which the Government plans to invest in. Thus, the budget for 2017 allocates €5.5 billion euros to this department, which is €385 million more than in 2015. Most of it will be oriented toward funding general education (€4.5 billion) while universities will account for €833.2 million. According to Junqueras, 3,599 new jobs for teachers are expected to be created, which would be a “historic” figure in order to “respond to the increase in the number of students”.

€5.8 million allocated for pro-independence referendum

The budget also foresees an allocation of €5.8 million to carry out the pro-independence referendum which the Government committed to call next September. In particular, the draft which will be put to vote before the Parliament establishes €5 million for electoral processes and €0.8 million for participation. Moreover, the budget also anticipates the inevitable suspension of the referendum allocation by the Spanish Constitutional Court (TC) and includes hidden allocations so that it can be carried out anyway.

Contrary to what happened in 2014, when the budget also allocated €6 million within the Public Administrations department to guarantee the celebration of the 9-N symbolic vote on independence, this time the allocation is an explicit competence of the Catalan Ministry for Economy and Tax Office. 

€181 million euros more through tax reforms

According to the Catalan Ministry for Economy, the Government will collect nearly €181 million more by reforming income tax and the introduction of new taxes. In this regard, the Catalan executive plans to eliminate tax relief for property purchase for those who earn more than 30,000 euros per year. This point will have to be passed by CUP’s National Board on Saturday but the pro-independence party’s members have already admitted that they are keen on the proposal. CUP’s aim, however, went a bit further since they bid for increasing income tax on those who earn more than 60,000, but this proposal is not apparently on the table.

The draft is set to include tax reforms as well as the introduction of new taxes especially oriented toward avoiding property speculation. Amongst these, the document which CUP’s National Board will have to put to vote this Saturday foresees the increase of tax on property transfers which are worth more than €1 million. This will allow the Government to collect €27 million more in 2018. The draft also foresees the creation of a new tax on non-productive assets which will affect legal entities which have properties and vehicles which are not used for any economic activity.

The Government and CUP also plan to tax negative externalities, those economic actions which could have a negative effect on citizens’ welfare or the environment. Thus, there will be a tax on sweetened beverages, which will represent an additional €40 million and the tourist tax will be modified in order to tax all cruise passengers, regardless of the length of their stay.

CUP insist: “this is not the best budget possible”

Radical left pro-independence CUP, the main partner of governing party ‘Junts Pel Sí’, refused to pass the bill for 2016 last June, which led to the vote of confidence promoted by Catalan President, Carles Puigdemont. They considered the numbers presented then to be “too autonomic” rather than responding to the pro-independence aspirations of Catalonia. Thus, the bill for 2015 had to be extended.

CUP have decided to give their support for the current draft for 2017 to be put to vote. However, they have repeatedly insisted that this doesn’t mean backing the bill but allowing the debate. In this vein, CUP MP, Eulàlia Reguant contradicted Junqueras and assured that this budget “is not the best possible”. “Despite the Spanish Government’s and the ‘Troika’s impositions, there is still much room to explore and yet it has not been done”, she lamented. “A budget which doesn’t explore all the possible room is not ours”, she stated.