Col·lectiu Emma - Explaining Catalonia

Friday, 11 march 2011 | Catalan News Agency


“Catalonia is not to be blamed for Moody’s downgrading of Spanish debt”

(From Catalan News Agency)

CNA / Laura Pous
London (ACN).- The day Moody’s rating agency downgraded the Spanish Government’s long term debt, experts in regional fiscal redistribution met in London and discussed the Spanish case and, in particular, the Autonomous Communities’s self-governing . Their main conclusion is that Catalonia is not to be blamed for Spain’s public deficit, the accumulated public debt and the overall state of the finance sector. The think tank Chatham House organised the conference ‘Devolution in a Globalised World’. In a debate chaired by professor Alan Trench from the University College of London (UCL), experts in economics and regional fiscal redistribution discussed the Spanish model, Catalonia’s fiscal autonomy and its responsibility in the rating of the Spanish public debt. According to Trench, the solution for the Spanish case is to promote a “large fiscal devolution” that would make Catalonia have a separate debt from the Spanish State administration. Trench also thinks that Catalonia should have the capacity to collect all the taxes in relation to all the services it has to provide to the Catalan citizens.

“Spain created a system in which, despite the fact that many taxes are partially devolved [decentralised] and that those tax collections finance the autonomous communities, the large part of the control is in the Central State’s hands”, Trench said to CNA. According to the academic, some Autonomous Communities have been transformed into “expenditure agencies” more than into governments “responsible not only for providing services, but also for getting the money to pay for them”. According to Trench, the fact that Autonomous Communities such as Catalonia do not have a total control on its funding “provokes risks”, as they have to assume an “important expenditure in public services”, such as Education or Healthcare. “The answer to this issue is similar to the one adopted in Canada, where there is a large-level of fiscal devolution and [provinces] have the power to issue bonds into the market in their own right”, emphasised Trench. To reach this solution, the Spanish State “should be able to give away the tax collection and its competences on taxes, in order to set those according to the functional responsibilities” of Catalonia.

Professor Joep Konings from the Belgian University of Leuven underlined that Moody’s downgrading of the Spanish debt is “related to market speculation”. He insisted that Autonomous Communities cannot be blamed for the crisis. “It is a domino. First it was Greece, then Ireland and Portugal will be in the same situation pretty soon”, explained Konings. “The next in the list is Spain”, he added. “I don’t think it has anything to do with centralisation or decentralisation within Spain”, indicated the expert in regional economies.

The chairman of the think tank ‘Reform Scotland’, Ben Thompson, thinks that neither Catalonia or the other Autonomous Communities can be blamed for decisions that, in most of the cases, have been taken by the Spanish Government. According to him, Catalonia should have a larger control over its public finances. “If we had had more responsibility at local level, in the United Kingdom we would not have ended up spending 30% more than what we collect at the central government level”, he lamented. “There is a series of responsibilities that small countries need to take, and I think they carry a greater efficiency”, ensured Thompson. For Alan Trench, Spain’s problem is not the devolution process having gone too far, but the contrary. According to Trench, the current problems regarding regional fiscal distribution, the Autonomous Communties’ funding and the Spanish public debt is that “the constitutional reforms went quite far, but not far enough”.

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Col·lectiu Emma - Explaining Catalonia

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Col·lectiu Emma - Explaining Catalonia