Monday, August 8

The draft of the Catalan Budgets does not foresee touching any tax

The Government advances in the drafting of the new budgets of the Generalitat for the year 2022 with the aim that they enter into force on January 1. In the absence of closing the negotiation with the CUP to obtain its parliamentary support, the Department of Economy headed by Jaume Giró has the draft of the so-called accompanying law, which regulates taxation, is ready. A draft in which Giró has chosen not to introduce any modification in the taxes of more weight and to leave the fiscal policy as in the year 2021, when the Government agreed with the ‘commons’ a retouch to make the collection more progressive.

The ERC and CUP pre-agreement includes a public electricity company, a universal income pilot plan and a new “onslaught” to the State

Know more

In this way, the head of Economy has resigned, from the outset, to lead from the Government the proposal to reduce the personal income tax of the lowest incomes, a formula that he himself had suggested to try to convince the anti-capitalists. However, the talks to obtain the support of the CUP remain open and even after the Executive approves the bill, the groups could take advantage of the parliamentary process to negotiate modifications.

The draft, to which has had access, tiptoes over the tax issue beyond the usual technical modifications and updates of rates and public prices. To begin with, neither in the articles nor in the reports appear modifications in the autonomous section of income tax, nor in figures that are usually the subject of claims by left-wing groups, such as the wealth tax.

There are also no progressive changes in the inheritance and gift tax, beyond a small tweak that will allow the deferral of payments to go from one year to two, justified by the economic situation caused by the pandemic. There are also no changes in the taxes of the Generalitat, a figure with which Catalonia has created abundant green taxation over recent years, but which in 2022 will neither be expanded nor reduced, at least in the project that the Government is ready to approve.

The proposal to reduce personal income tax for workers who declare the least is a recurring idea in Catalonia, the community where low and medium incomes pay more. Although since 2015 there have been several modifications to increase this tax for the richest taxpayers, the last one last year, the reduction from below has been more resistant due to the strong effect that any reduction in these sections has on the collection, that affect all taxpayers. Despite this, Giró had publicly expressed that the idea of ​​lowering taxes for families with less income did not seem bad to him.

The minister came to verbalize the proposal to reduce personal income tax in the lower sections at the beginning of this month, when he launched it in the form of a proposal to the CUP. The anti-capitalists had challenged him in Parliament to increase taxes on the rich and lower them to the lower income sections, to which Giró responded by assuring that 72% of Catalan taxpayers declare less than 30,000 euros. “Let’s work here,” claimed the head of the Generalitat’s finances.

A few weeks earlier, he had promised himself that there would be no uploads. “The tax burden in Catalonia will not go up,” he solemnly proclaimed in September in the Parliament, although he left the door open for small changes: “That does not mean that there may be some retouching in some downward tax and another that goes up slightly.”

These “minimal changes” are those that the minister, like the Government as a whole, are willing to negotiate during the parliamentary process, which cannot begin later than November 16 if the objective of starting the new year is to be met with the accounts already approved. For this, therefore, the negotiation with the CUP, the Executive’s preferred partner, should be closed earlier.

Bargaining stuck

Anti-capitalists have been warning for weeks that things are not going well. “Time is running out”, warned the deputy Eulàlia Reguant this Tuesday. “If ERC and Junts have the real will to approve the budgets, they must show it a little more,” he added. A few words that set off the alarms in the Palau, where the CUP deputy was summoned a few hours later.

The CUP has claims in tax matters but, above all, in the chapter on expenses. Aware that taxation has reached a state in Catalonia in which there is little room to make it more progressive without affecting collection, the CUP wants there to be specific and well-equipped spending items for some of the policies agreed with ERC to facilitate the investiture of Aragonès, such as the internalization of sanitary services or a new public energy. It is these policies that, in the opinion of the anti-capitalists, should cement a prior budget agreement, beyond the fact that they may also register any tax amendment in Parliament.

The poor prospects in the negotiation with the CUP have not made Giró step on the brake of the tax bill for 2022. On the contrary, the minister wants to have the accompanying law ready to be approved on time, regardless of whether there is an agreement or not with the CUP.

Both the Economy and the Government as a whole have insisted that the priority for the accounts is the anti-capitalists, but the truth is that since the summer the PSC has extended its hand to the Executive and Giró himself to show themselves as possible supporters. The Socialists insist that the budgets cannot depend on an anti-capitalist party like the CUP and they threaten with an abstention if Pere Aragonès finds himself with problems to stabilize the legislature.

But this possible ‘plan B’ of relying on the socialists to carry out the accounts is not a dish of taste for ERC, which considers that it would leave its investiture agreement with the CUP on paper, which Junts did not join. Republicans understand that the anti-capitalists are the Government’s preferred partner and with whom it is necessary to understand yes or yes to carry out the main projects of the legislature, starting with the first accounts of their mandate. In addition, being doomed to an abstention from the PSC in the coming months reduces ERC’s negotiating force in Congress, where Republicans do not rule out ending up giving the Government a pulse in the negotiation on the General State Budgets (PGE).