Catalan Parliament asks for increased fiscal autonomy from Spain

Multi-party proposal wants to establish an own Catalan agency to collect and manage all taxes in Catalonia · The aim is to put an end to a fiscal deficit of 16,400 million euros a year · Catalan president Artur Mas admits an agreement with the Spanish government is unlikely · Pro-independence parties want to start a secession process if Spain does not accept the plan

The Catalan Parliament yesterday passed a proposal that would grant Catalonia increased fiscal autonomy from Spain, including a separate Catalan tax agency exclusively ruled by Catalan self-governing institutions and that would collect and manage all taxes in Catalonia. The proposal was the main manifesto commitment of the ruling Catalan centre-right party alliance Convergència i Unió (CiU) in 2010 Catalan election.

If ever achieved, the system would give Catalonia near fiscal independence, except for the fact that it is foreseen to adapt it to the EU tax harmonisation process and that it still includes the payment of two different quotas to the Spanish government. The first one would pay for the services that the Spanish state delivers in Catalonia, and the second one would grant a limited amount of interterritorial cooperation within Spain.

Up to date, only the two Basque autonomous communities of Euskadi and Navarre have a similar fiscal system in Spain.

The aim of the Catalan Parliament is to put an end to the fiscal deficit (or "fiscal plundering", as it is usually known in pro-independence milieus), which amounts to some 8-10% of the Catalan GDP. According to recent data released by Catalan minister of Finance Andreu Mas-Colell, the fiscal deficit of Catalonia with Spain was 16,409 million euros in 2009.

Multi-party support for the proposal

The proposal was supported not only by CiU, but also by opposition parties Republican Left of Catalonia (ERC, pro-independence centre-left) and Initiative for Catalonia Greens (ICV, federalist ecosocialists), and also by two individual MPs: former FC Barcelona president Joan Laporta and Ernest Maragall, who made a free vote since his Party of Socialists (PSC, pro-autonomy centre-left) abstained. Both Spanish nationalist Popular Party (PP) and Citizens (C's) rejected the plan.

It is now foreseen that Catalan president Artur Mas (CiU), together with ERC and ICV representatives, will negotiate the implementation of the proposal with the Spanish government led by Mariano Rajoy (PP, Spanish conservatives). Mas yesterday admitted that there are no big chances of success in this negotiation, since Rajoy has repeatedly stated that he will never agree to any system that gives Catalonia such a big deal of fiscal autonomy.

ERC and another smaller pro-independence party (Catalan Solidarity for Independence, SI) have proposed that Catalonia starts a full independence process if Spain does not accept increased fiscal autonomy. This one is indeed the difficult choice that Mas will face in the likely event that Rajoy only offers a very limited improvement of Catalonia's financing needs. Mas could accept that insufficient deal (and then his government could face enormous discredit in Catalonia) or else could he abide by his promise and unilaterally establish the Catalan tax agency. No need to say that such a move would open an unprecedented conflict with Spain.

Catalonia currently looking for aid from Madrid

The move by the Catalan Parliament, although being prepared since 2010, has coincided with a critical economic situation that may push the Catalan government to ask for financial aid from Madrid. The Valencian Country, another underfinanced autonomous community, has already done so.

In order to explain this apparently contradictory situation, an organization of the Catalan civil society (Col·lectiu Emma) yesterday released an open letter "with the endorsement of a number of respected civil society representatives", including university professors, businessmen, MEPs and writers. The letter explains that Catalonia is "facing a grotesque situation in which the central government -a net recipient of Catalan resources- threatens with intervention a community that was the first to implement painful austerity measures and whose economy, if given a chance to develop, could best ensure the state's economic viability". The text also warns that "economic grievances are cited by many of the Catalans who have been warming up to the idea of independence in the past few months".