Etiqueta: fiscal plundering

Mas fails to defend Catalonia’s interests

albert 2 Comments

The perversity of the Spanish tax system is that Catalonia, while is being plundered every year 40% of taxes collected in Catalonia which never come back, has just been forced by Spain to a humiliating bailout.

The yearly fiscal deficit of Catalonia with Spain amounts to 18 billion euros for a population of 7.5 million.

How can the system be such that the net contributor to the finances of a state, Catalonia, needs to be bailed out with their own money? How can Spain blame Catalonia for the state of their dire finances when most services are provided by Catalonia but most debt is caused by the Spanish government spending?

Catalan President Mas and its government have failed today to defend Catalonia’s interests and has opened the possibility for Spain to suppress Catalonia’s institutions. In the terms that Mas’ party voted for in Madrid.

Mas promised he would achieve fiscal independence for Catalonia during this term but instead his government has surrendered what was left of Catalonia’s self government to Spain in a silver platter for a mere 5 billion euros. Mas has failed to stand for its country.

Because essentially after the bailout, any deviation from the deficit targets by Catalonia, which it will not meet because of the general state of the economy, will mean that the Spanish Government will be able to decide exactly how every euro cent will be spent in Catalonia (CA). So it will be almost impossible to stop things like this or this from happening.

Not to speak of the public and international humiliation at having Catalonia be seen as an irresponsible country and the damage to its image and credibility because the Catalan Government has failed to explain the situation.

Mas should resign immediately and call for elections.

Madrid’s “No” is Catalonia’s ladder of escape

albert 1 Comment

The Catalan Parliament shifted visibly on wednesday from left-right blocks to Catalonia-Spain blocks. CiU, ERC and ICV, the Catalan parties, voted in majority on one side to demand Spain for Catalonia to collect all its taxes. PSC and PP were on the other side.

Catalonia is being deliberately starved of its own resources by the Spanish Government to force a bankruptcy and intervene. While this struggle may seem from the outside as purely an internal Spanish problem it is not. The starvation of resources is deliberate to force Catalonia to ask for a bailout to continue with Spain’s nationalistic agenda.

Even though from Catalonia things could certainly have been done better it would not be in this dire situation if it wasn’t for the 16 billion euros, or around 8-10% of its GDP (that’s about 40% of all taxes collected in Catalonia) which is plundered every year by Spain. Catalonia is only asking to dispose of its own resources in this time of crisis.

On wednesday a clear shift has taken place and the Catalan Parliament shows now a Catalonia-Spain dicotomy. While many independentists don’t believe this intermediate station is required (to ask Spain for Catalonia to collect all its taxes) Spain’s predictable reaction may be and eye opener for many to join the pro independence ranks. Currently 51% of Catalans would vote yes to independence and only 21% would vote no. With a 8% growth of the yes option only in the last year.

Immediately after the Catalan Parliament resolved to demand Spain to collect all taxes (currently Spain collects >95% of the taxes in Catalonia) Spanish Miniter Montoro completely discarded the possibility. The Basque Country already enjoys the tax collection system that Catalonia is demanding and it has proven effective since unemployment figures are half of those in Catalonia and it’s economy much more sheltered from the Spanish crisis.

After the summer Catalonia will need financing from Spain to pay its debts, but in exchange Spain will demand political changes that will be targeted against Catalan culture and interests. Spain has been using the legal system to this end in the last 3 decades.

And then at that point Catalonia will be at the crossroads. To let Spain take control and disappear or to become a State. President Mas will have to take control of the situation justified on Spain’s disloyalty against Catalonia and eventually let Catalan people speak. Events are accelerating.

Practical guide for Spanish governments on how to increase Catalan independentism

albert 17 Comments

I have come to the conclusion that the Spanish Government are infiltrated Catalan independentists plotting to get Catalonia out of Spain as quickly as possible. You may be tempted to think I have completely lost it but it is the only conclusion I can reach after carefully analysing some of their actions in the last year only:

1- ignore all claims to negotiate a fair financial deal with the area which produces most of the exports in your state so that they can produce and export more, generate employment, increase your tax income and get you out of the crisis

2- attempt to minoritize even more their beloved language by sabotaging their educational system by attempting to enforce language segregation instead of fixing the real problems that make you score at the bottom of the PISA report

3- insist on squandering billions of public money to build the longest high speed train network in Europe which has already proven a financial disaster instead of building the mediterranean freight railway line that would boost trade and exports (as the European Union is asking (ca))

4- instead of increasing infrastructure investment in your most dynamic area to boost its economy reduce it by 45% (ca) while only reducing it on average by 24% in the rest of the state

5- plunder 8% of that area’s GDP for the last 30 years and at the same time accuse them of being the culprits of the crisis. Top it by threatening to intervene them even though they are the only ones having acted responsibly and started reducing their budget one year before you did

6- bail out Madrid’s toll roads by extending the toll road concessions of Catalan toll roads (ca). Making Catalans, who already have 67% of the toll roads in the Spanish State, pay also for Madrid’s toll roads (Catalans were already paying for Spain’s non toll roads through their taxes)

7- refuse to pay 1.4 billion euros you owe the Catalan government claiming that because of the crisis there is no money left. Immediately afterwards bail out Madrid-government controlled savings bank with 10 billion euros of taxpayers’ money.

8- sabotage Barcelona’s airport international connections to favour Madrid’s expansion using a government controlled agency, AENA. (Being, together with Portugal and Romania the exceptions to the rule in Europe, where airport competition is encouraged)

9- block international recognition of Catalan language in Europe instead of being proud of having such a cultural asset and promoting it

10- reply the increase of Catalan independentism by threatening with economic and physical violence (for example, here and here)

10- finally, get your head of state and his family members involved in several scandals within a few weeks: corruptions charges in cases involving public money, underage people getting shot while playing with guns, being caught hunting endangered species in exotic countries. And to make things worse do all of this in the midst of an unprecedented crisis when you should be closely following what is going on.

They deserve my applause. Way to go Mr Rajoy!

Will Europe just sit and watch Spain’s financial suicide for nationalistic reasons?

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The Spanish government is using the Autonomous Communities as a smoke screen to hide their disastrous handling of the situation, and use the crisis as an excuse to give Catalonia the coup de grace, eliminate its self government and accomplish the old Spanish dream of a culturally uniform state.

Blaming the Autonomous Communities as the main culprit of the crisis is a ridiculous argument since Catalonia only holds 6.5% of the Spanish public debt while sustaining a fiscal deficit of 8% of its GDP every year without which its finances would be very different. The Catalan Government already did its homework and last year cut its budget down by 10% and has announced further 5% cut in civil servants’ salaries this year.

The Generalitat has raised a flag claiming that the State is planning to look for an excuse to intervene Catalonia by starving it from its resources, forcing the Generalitat’s bankruptcy and then coming to the “rescue”, to prove the Catalan government’s “incompetence”.

In the meantime international press and European governments are worryingly buying the Spanish government’s discourse. Instead on focusing on Spain’s real issues.

After last year’s elections it was time for Spain to reform their oversized state structure inherited from Franco’s regime which has the following traits:

  • all power centers are in Madrid with a strong breed of privileged public servants
  • economy based on former state monopolies, like Telefonica, used as employment agencies for retired politicians and their relatives with a captive market subsidizing them
  • an oversized army
  • irrational infrastructures spending
  • oversized welfare services aimed at keeping Spanish voters happy bringing an illusion of progress

All of this subsidized by the (formerly) richer Catalan countries and the funds coming from Europe. But for the last 30 years instead investing in the modernisation of its economy Spain has created the biggest real estate bubble in the world. Catalan politicians are also partly to be blamed for allowing this to happen. Now the fountain has dried up. After the draining of resources Catalan countries are in a precarious financial situation and the European funds are not flowing anymore.

But even now the Spanish fiesta goes on. Boosting Catalonia’s economy, its most dynamic area, which represents 20% of its economy and 27% of the exports, would be the only hope for the Spanish economy to get out of the crisis Spain is instead ignoring its own laws and bringing it down.

An example, this year 925 million euros are budgeted for the high speed train to Galicia, which would not even make sense in a good economy while refusing to pay Catalonia 978 million euros pending from 2008 and 2009 and announcing a cut of 45% infrastructures budget in 2012 for Catalonia compared to last year, infringing Spanish law.

But the markets are unforgiving and don’t believe that the changes Rajoy is making will put things under control. The intervention of Spain’s government is practically a matter of time.

Why this irrational behaviour?

In practice Spain does not acknowledge Catalonia as Spanish, it is instead treated as a colony from which to extract resources until depletion. It will not hesitate to sacrifice Catalonia to protect its privileges and state structures from the cold of the crisis even at the expense dooming Catalonia’s, Spain’s (and Europe’s?) economy.