Círculo de Economia calls for a new Catalan Statute and regional funding system

BarcelonaToday Barcelona’s Círculo de Economía released a statement calling for the end of Spain’s “worst crisis since the Constitution was approved in 1978” and demanding a reformed Statute that would be “recognised as constitutional law within the Spanish Constitution”. As well as granting Spain’s regional governments greater fiscal powers, the Círculo espouses a new funding system that would require Navarre and the Basque Country to make a contribution to the interregional solidarity kitty. The Barcelona-based lobby released the statement ahead of its yearly conference, which will kick off in Sitges on Thursday afternoon.

The document, which was jointly approved by the Círculo’s executive committee, strikes a balancing act between emphasising their “utmost respect for the rule of law” and urging “the political powers to find the appropriate lawful ways to channel the people’s legitimate aspirations and preferences”, as otherwise “the law tends to be flouted”. This is the formula with which they aim to warn both the secessionist parties and those who refuse to engage in talks.

The Círculo’s note calls for granting Catalonia greater powers through a new Statute that would be “recognised as a true Catalan Constitution”. Firstly a pact would be needed between the Catalan political parties and later they would seek an agreement with the central government. The Círculo de Economía believes that at the root of the current crisis is the fact that the present Statute was not voted by the Catalan people after it was watered down by the Spanish Constitutional Court. “Catalonia is the only region whose most fundamental institutional law hasn’t been approved in a referendum”, they note.

The Círculo, currently chaired by Juan José Brugera, believes that with this new Statute “the share of powers between the Catalan and central administrations would be enshrined in the Constitution”, whereas the Catalan Statute “would address the region’s own home affairs”, such as language, education, culture and the management of self-government. This new Statute would have to be approved in a referendum.

Greater fiscal powers

The second aspect of the Círculo’s proposal is a new funding deal. No reference is made to the possibility of granting Catalonia its own separate fiscal system. In fact, they propose a system that leans toward a standardisation across the regions, where Navarre and the Basque Country would be expected to give up their privileges and make a greater contribution to the interregional solidarity fund. Likewise, the document proposes a reduction of the regional differences in the yearly public spending per capita.

However, the Círculo do call for “greater powers to legislate, manage, collect and inspect” tax revenues by regional governments, which would share their “tax bases” with Spain’s central government. This way the regional administrations would receive their tax revenue upon being collected without having a long wait —as they do now— before the funds are funnelled through the system by the central government. As in the US, the proposal contemplates a dual taxation system (central and regional) for income tax, VAT and business tax.