The Rule submitted an opinion document to the Ministry of Finance in which rejects the concept of adapted population and defends that “striving and working to achieve full fiscal sovereignty”, as confirmed by Europa Press. The Catalan General Board conveyed these ideas last Friday in a 10 page document, in which he assures that while that sovereignty is not achieved, he must respond to the request to express his opinion on the proposals relating to the financing model promoted by the state government, as published by various media this Sunday.
Specifically, it considers that the proposal of the review of the financing system based on a proposal on the adapted population implicitly carries a distribution model of mean, instead of a model of financial autonomy, which he considers “very relevant” to improve the financing system. In the document, signed by the ‘Consul’ of Economics and Finance of the Generalitat, James Giro, It is noted that the beginning of the model review of funding with a proposal on the adjusted population comes to indicate that the global model that will be proposed “will not improve the financial autonomy of the autonomous communities”.
Non-robust variables
“A model is seen in which the spending needs instead of considering the tax capacity of each autonomous community as essential. A financing model based on needs distances us from the financing models of the most developed federal states ”, the text collects.
It also maintains that the way spending needs are approached is also not suitable because it introduces, for example, “technically weak corrective variables”, while omitting others that may be directly related to the needs, with special occurrence in Catalonia. Specifically the government do not see sufficient justification for the incorporation of the two new corrective variables: the depopulation and the Fixed costs; in the first case it considers that it should be addressed outside the funding model by public policies, and in the second he does not see sufficient arguments for its inclusion.
vertical imbalance
For this reason, he believes that the Report of the Working Group on the adapted population calculation sent by the State Government on 3 December 2021 “is not exactly a proposal to reform the financing system”, but offers only a proposal on one of its elements, exactly the one that should be considered last. The Catalan General Management believes that it should be assessed in the first place whether there is a vertical imbalance between the resources of the State and those of the communities, to then decide what taxes will be allocated to the communities that will form part of their tax basket.
“In this sense, and on the basis of the necessary correction of the vertical imbalance, it must be decided whether the tax basket of the communities. At this stage, the need to increase the regulatory capacity on tax figures and to assign a relevant role to the communities in the management of said taxation should also be analyzed.
Finally, he believes that the value of the leveling system necessary so that no communities have to apply a higher fiscal pressure in order to provide a similar level of public services: “It is at this last point where the calculation of the needs indicator comes into play, in this case, the adjusted population “.
Purchasing power differences
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To improve the financing system, the Generalitat believes that the simplest and simplest variable to apply is the population, which in any case can be “corrected” by the price difference between the different communities. He assures that this indicator “reflects spending needs”, as the population is generally the one receiving regional services and the price level indicates the differences in purchasing power.
On 3 December last year, the Government had already assured that it would be difficult for the “underfunding and the fiscal deficit“can be corrected with a new regional funding model and the Treasury has warned that the concept of adapted population does not match reality of Catalonia.
Reference-www.elperiodico.com