The Spanish Government temporary reduces the VAT on new flat’s purchase, asks the largest and profitable companies to advance money from their corporate tax, and obliges doctors to prescribe generic drugs and not brands. With all those measures, the Spanish Government expects to get 4,900 million extra euros until the end of the year.
The European Commission also recognised "a different effort" to the rest of Spain’s Autonomous Communities. Brussels said so when on Tuesday it asked Spain “to strictly control” the public “deficit and debt of regional governments”, the day after Moody’s rating agency warned about Catalonia’s expected deficit for 2011. The Spanish Government took note from this particular recommendation but not the other made by Brussels, which included increasing energy taxes and VAT. The Catalan Government criticised Moody’s for “creating alarm” with assessments that do not take into account the whole situation. In addition, it denounced how the Spanish Government has reduced its own deficit by transferring it to the Autonomous Communities.
After the presentation of the Catalan Government’s budget proposal at the Catalan Parliament, opposition parties criticised its content and the lack of debate on the subject. The Catalan Government needs support from opposition MPs or at least their abstention to approve the budget, which foresees a 2.66% deficit for 2011. The Spanish Vice President for Economy Elena Salgado insists that the mechanisms of deficit control “will be strictly implemented”.
Elena Salgado, the Spanish Vice President for Finance, wanted to end the debate and discarded transferring the 1.45 billion euros from the fund in 2011. This is the amount asked for by the Catalan Government. The Catalan Minister for Finance has been asking for “co-responsibility”. The same day, the Spanish Senate approved a motion asking the Spanish Government to pay this fund this year as it is its legal obligation. The Catalan Government prefers political dialogue than taking the issue to the courts, as suggested by the Catalan Socialist Party.
Spain saw 2010 end with 9.24% of public deficit; 4.97% corresponds to the Spanish Government, 3.39% to the autonomous communities and 0.64% to the local administrations. According to the Spanish Government, half of the autonomous communities saw the year come to an end far away from the objective of 2.4% - Catalonia included. The Catalan Government emphasised that the Spanish Government cut down the revenues of the autonomous communities.
Artur Mas, the President of the Catalan Government answered the Spanish Vice President for Economy, who yesterday suggested that he should raise taxes. He also wants to stop the debate about which percentage of the public expenditure should be cut, after the insistence from Madrid to go beyond the 10%. The Advisory Council for the Economic Recovery met today for the first time. Mas also announced a Catalan summit on economic recovery scheduled for the 25th of March.
The Spanish Vice President for Economy Elena Salgado refused the idea proposed by three Catalan parties to allow mortgage holders end their debt by returning their house to the bank. This measure already exists in the US and other countries. In Spain, a country with a high unemployment rate, many people are not able to afford to pay their mortgage. However, at the moment, debt does not disappear when banks execute mortgages and take away the house. Salgado wants to keep the current system in order not to harm the banks and thus the recovery, but at a high social price.
The difference between what an autonomous community produces in terms of revenues and what it finally receives, once the Spanish State has redistributed those revenues among all the communities, has only officially been quantified once in history. It was in 2005, following an agreement of Prime Minister Zapatero with the Catalan nationalist forces. Catalonia’s political and business class have called for the systematic publication of the “fiscal balances” several times.
The Spanish Ministry of Economy believes that the budget cuts for autonomous communities have nothing to do with the 7.9% cut in the Spanish general budget.