To reform the regional funding system

After three years of having ignored the review of the regional financing system, in breach of the law itself, the Spanish government has now put it on the table. The funding of the Catalan government interests the citizens who live in Catalonia, as revenues determine the quality of public services.

Given that, some may ask if the Catalans should be interested in the negotiation proposed by the Spanish government. However, one could first ask why they waited until now. Instead of reviewing the regional funding system earlier, the Spanish government preferred an absolute control over the finances of Catalonia through the Regional Liquidity Fund, which was presented as supporting the finances of the Generalitat. In fact, if the Catalan government controlled the taxes collected in Catalonia it would have no treasury problem.

The underfunding of the government of Catalonia has a long history. In 1985, Ramon Trias Fargas, the Catalan minister of Economy and Finance who knew the background of the regional funding system, already reported that the system was intended to suffocate the finances of Catalonia as a tool for political control.

Since then, successive reforms of the system have not improved the finances of Catalonia, as every review simply maintained the situation for communities favoured for political reasons. Among these there is especially the artificial community of the capital of the centralised state, Madrid, though they try to hide it by manipulating figures that do not take into account the effect of being the capital.

The principle of ordinality is not respected: Catalonia, despite having a high tax collection receives fewer resources per person than the average. If we also look at the level of prices in Catalonia, significantly above the national average, it turns out that the resources the system provides at present in Catalonia stands markedly below the average in real terms.

This, after every revision, was presented as an improvement. The truth is that despite the appearance of fiscal federalism the system is not decentralised as for revenues. With reference to the redistribution of income, the real effect has always been an arbitrary and disproportionate distribution by the state, using unjustified variables and weightings despite appearances.

To solve the problems, a better economic policy and more resources are needed. Nor is it possible within Spain because the state neither wants nor can change it. Indeed, the crisis has revealed a structural inefficiency of the political and economic system. Only with independence could the Catalan government obtain sufficient resources to solve the problems of the Catalans. Thus, the unemployment rate could drop from the current 15% to 7% with the removal of the huge fiscal deficit with Spain.

The Spanish government with its current proposal to revise the system seeks to divide the independence movement. However, the democratic mandate of the Catalan people expressed in the elections to the Parliament of Catalonia was clearly in favour of the tax office of the Catalan Republic, the only one that can help solve the problems of the citizens.