Catalonia’s share of TC budget exceeds cost of Catalan embassies

BarcelonaEconomist Ángel de la Fuente —the director of Spain’s Fedea (Fundación de Estudios de Economía Aplicada)— often claims that the method he devised to work out Spain’s regional accounts balance (known as the “regionalised public accounts method”, an alternative to the two internationally-recognised systems used by the Catalan government to calculate the Catalan fiscal deficit) features a remarkable novelty. Besides finding out whether any given region has a cash surplus or a deficit, De la Fuente’s method makes it possible to ascertain what specific items tax revenue was spent on.

As a result, this week we learned that —according to figures by Minister Montoro’s most trusted economist, who only uses the tax-benefit method and ignores the monetary flow model— in 2013 Catalonia endured a fiscal deficit that amounted to €7,189m (a €986m increase over the previous year). In addition, we found that the Spanish government’s official accounts detail in what way Catalan taxpayers’ revenue is spent and how —according to this method— their contributions benefit them with any given return.

The appendixes in De la Fuente’s report include dozens upon dozens of tables that go into great detail and allow us to determine how much revenue is returned as welfare and social benefits, as cash transfers or infrastructure projects. However, other alleged benefits for Catalans and Catalan businesses are more questionable or, at the very least, much more indirect. For instance, in 2013 Catalans spent €973.7m to pay for Spain’s central administration —based in Madrid city— while €1,306.4m went to defence and a further €424m was spent on Spain’s National Police and Guardia Civil, even though Catalonia has its own police force with nearly full powers. According to De la Fuente, these amounts do not add to Catalonia’s fiscal deficit because Catalans benefit from those services.

Central administration: the Constitutional Court, the Royal Family, foreign affairs and the Spanish parliament

With the regionalised public accounts method the cost —and the benefits— of Spain’s central administration are spread evenly, mostly according to the population. Therefore, even though the vast majority of Spain’s public institutions are based in Madrid —as are their employees, whose wages are also spent locally— De la Fuente believes that the benefits are shared by all Spaniards equally and that’s why their costs are also evenly spread. For example, on the subject of high-ranking government officials, which cost €487m, each Spaniard contributes €10.37€, regardless of the region where they live. For Catalans as a whole, the tab amounted to €78.2m in 2013.

So what is included in that item? For instance, Catalonia contributes €3.4m to pay for Spain’s Constitutional Court, an amount that exceeds the Catalan government’s budget for its delegations, offices and representation abroad. These are the “notorious Catalan embassies” which the PP and Ciudadanos blame for Catalonia’s dire finances, even though there is a €3.1m overall spending cap on them. As a matter of fact, in 2013 the Catalan budget for these services only amounted to €1.1m. Likewise, the budget for Catalonia’s Council of Statutory Guarantees is €3.3m, less than what Catalans pay towards financing Spain’s Constitutional Court. Other items include €2.2m for the Spanish royal family, €5.5m for the Spanish presidency, €4.6m for Spain’s General Council of the Judiciary and €32.3m for Spain’s parliament and senate, not much less than the overall budget allocated to the Catalan parliament (€53.2m).

The regionalised public accounts report also indicates that Catalan taxpayers funded Spain’s foreign policy with €198.4m, an amount that included cash for cooperation and development projects but not for Spanish embassies and consulate generals. Actually, this item costs Catalan taxpayers €50.8m and can be found in the report under “other general interest services”, together with transport between ministries, Spain’s Official Gazette and the costs of holding elections and funding political parties —a total of €11m for Catalonia—. Therefore, Catalonia spends sixteen times more money on Spain’s representation abroad than on its own. At any rate, De la Fuente’s report shows that Catalans spent €102.9m on these general services, as well as €374.7m on Spain’s tax, finance and budget management, which includes the Spanish Treasury and the Institute of Accounting and Accounts Audit, plus €31.7m on social and economic research, which includes the Spanish National Institute of Statistics. All these amounts exclude cash transfers to other administrations or government entities and all expenses incurred by oversight bodies in energy, telecommunications, the stock market and the Bank of Spain, all of which institutions have no equivalent in Catalonia.

Vacant ministries: Culture, Education and Health have a budget but no powers

For years Catalanism demanded that the Spanish State went on a slimming diet to save money and avoid power feuds by scrapping the ministries of Culture, Education and Health, given that nearly all their powers have been devolved to the regional governments. Convergència i Unió —and even the Catalan Socialist Party (PSC)— had argued for this before the start of the current independence bid. Lleida Mayor Àngel Ros, the current president of the PSC, supported the idea in 2013, the year when —according to De la Fuente’s fiscal accounts— those three Spanish ministries cost Catalan taxpayers nearly €200m. If we consider only the running costs of Culture and Sports —and, again, we exclude cash transfers or funding for Barcelona’s Liceu Opera House— Catalonia contributed €112m. Health cost Catalan taxpayers a total of €57m, whereas Education received €18.9m

Defence and security: a substantial contribution to Spain’s police and armed forces

For years now Catalonia’s Mossos d’Esquadra have been fully deployed all over the nation, with Spain’s National Police and Guardia Civil retaining few powers. Still, De la Fuente’s accounts show that the benefits afforded to Catalonia by these two police forces account for €424m —once the benefits provided by the Mossos d’Esquadra to other Spanish regions are deducted—. Lastly, these accounts —which are endorsed by the Spanish government— estimate Catalonia’s contribution to Spain’s defence spending at €1,306.4m, with €170m earmarked for military upgrades and new armament.