Thursday, 15 June 2017

Catalan Tax Agency strengthened in preparation for independence

CNA

Barcelona (ACN).- The Commission for Economic Affairs in the Catalan Parliament passed a draft law on Wednesday that will strengthen the Catalan Tax Agency and prepare it for eventual independence. The Tributary Code Law will be the basis for the fiscal system that pro-independence supporters could implement in the future and would allow an independent Catalonia to manage its own Treasury. After Wednesday’s vote, the Economic Affairs Commission will now send the proposed law to the chamber for debate and approval. If parliamentary groups do not object to the law being put to a vote, the new regulation will be included on the agenda for the next plenary session. Governing coalition 'Junts pel Sí' and radical-left CUP have the overall majority needed to pass it.

At committee level, the text was approved with the votes from Junts pel Sí and CUP, despite the no votes from Ciutadans (C's), left-wing CSQP, the Socialists (PSC), and the People's Party (PP). The draft law establishes the general principles of the tributary framework and the values that will govern the fiscal policy of Catalonia in three parts. The text does not detail which taxes nor which competencies will be managed by the Catalan fiscal system, and mentions that, in any case, it will always work in accordance with the legal framework, without specifying if that would be set by Spanish laws or those that could be approved after independence.

The law strengthens the new Catalan Tax Agency by modifying the 2007 law that currently regulates it. The project will also allow for the creation of a Fiscal Advice Council for the Catalan government, which will have nine members, coming from the Government, local entities, associations and schools of fiscal advisors, and academia. The group will also include two representatives of social entities specialized in fiscal affairs and a member of the Tax Agency’s anti-fraud team. Finally, the proposed law also foresees the creation of the Research Institute of Public Finance and of Tributary Studies.

The original text was proposed last October and defended by the pro-independence groups as a regulation that creates the foundations of a so-called "state structure", a government body that could operate in the context of an independent Catalonia. Both the People's Party in Catalonia and Ciutadans complained that the text invaded the competencies of the Spanish government. They also criticized the pro-independence groups in the Catalan Parliament for preparing this law at a parliamentary level instead of at a governmental level, thereby keeping it from being linked to initiatives that the Spanish Constitutional Court has already nullified.

Strong economic growth

Meanwhile, the Catalan economy continues to grow at a good pace, exceeding expectations. The Catalan government raised its economic growth forecasts on Wednesday by 0.2% to 2.9%, setting Catalan GDP at €233.7 billion, which means an increase of 10 billion compared to 2016. According to the Ministry of Economy and Taxation, in 2018 the GDP is expected to reach €244 billion, which indicates economic growth of 2.6%.

The forecast for unemployment has also improved compared to November 2016, with unemployment now expected at 13.5% in 2017 and down to 11.6% in 2018. These figures translate into 80,300 new full-time jobs in 2017 and 76,000 in 2018. Domestic demand will drive economic growth, amounting to 82.7% of the increase, while external demand will also contribute positively. This year, up to 17.3% of the GDP will be linked to external demand, a figure that is expected to reach 19.2% in 2018.

  • 170614_Rafa_Garrido

  • The Commission for Economic Affairs of the Catalan Parliament (by Rafa Garrido)