Sweden and Australia to be models for Catalonia’s own Treasury

On Monday, the Catalan Government presented its model to build Catalonia’s own Treasury, which would include a tax agency to collect all taxes in Catalonia. Currently, these powers are in the hands of the Spanish Government, which then gives Catalonia part of these taxes back. For the last decade, a majority of the parties have been arguing for the creation of Catalonia’s own tax agency but the Spanish authorities have always opposed even talking about this. Furthermore, in the last 4 years, with the rise of the independence issue and the budget cuts due to the economic crisis, such an initiative has been even more pressing. In the event of an independent Catalan state, an effective Treasury would have to be created. However, if Catalonia continues as part of Spain, it is obvious that great and deep political changes are needed and that, if Catalonia is to fit more comfortably within Spain, its level of self-rule should be increased, particularly regarding fiscal and language issues.

‘Without our own Treasury, there is no real self-government’
During the presentation of the model, the Catalan President stressed that ‘without our own Treasury, there is no real self-government, and without self-government, there is no project for this country’. Mas argued that during the Transition from dictatorship to democracy, the majority of Catalan parties made ‘a mistake’, which was not prioritising the development of Catalonia’s own treasury. ‘In that moment, it was considered a minor issue and that mistake has had severe consequences’, as Catalonia’s public sector is under-budgeted, despite the high level of taxes paid, due to a large part of them being spent in other parts of Spain and never returning to Catalonia.

Indeed, despite Catalonia having one of the highest income per capita levels in Spain and paying one of the highest amounts of taxes per person, Mas stressed that Catalonia has an amount of public money per inhabitant below the Spanish average. This means that there is less money per person than in most of Spain to fund Catalan hospitals or schools. Mas recalled the manifold attempts to change this in the last years, including the proposing of the creation of a specific Economic Agreement between Catalonia and Spain. But the Spanish authorities rejected even talking about this, highlighted Mas.

Now, Catalonia has ‘a great opportunity ahead of us to build something different and better’, said Mas. ‘We have the ideas and the people and now the political conditions are needed to put this project into practice’, he said, referring to the forthcoming Catalan elections scheduled for the 27th of September and which will be transformed into a ‘de facto’ plebiscite on independence from Spain.

‘The Spanish tax agency is modern but it has not sufficiently evolved as have other models found in Europe and the rest of the world’, he added. The Catalan tax agency will be inspired by models in place in Denmark, Sweden and Australia, where tax authorities trust the large number of citizens and build a trust relationship that increases cooperation and efficiency. This way of working allows the administration to focus the larger amount of resources on the minority of people who evade taxes or work in the underground economy.

The Catalan model

Joan Iglesias, in charge of designing the Catalan model explained that they have divided citizens into 4 categories: the largest number are those who are willing to pay their taxes and try to do it correctly, although they can make occasional mistakes. The new Catalan tax authorities would cooperate with these citizens, and try to help them to correctly pay their taxes, while citizens would have unlimited access to their fiscal data and could pay taxes with greater flexibility. The second group are people who pay most of their taxes correctly but who make small tricks not to pay some other taxes or part of them. The Catalan tax authorities would try to implement campaigns to raise awareness against these attitudes. The other two groups are those working in the underground economy and therefore not paying taxes and the people who directly evade most of their taxes. The main efforts would be allocated to persecuting these people and greatly reducing fraud.

The Catalan Treasury is to be divided into 4 departments. Firstly, there will be a tax agency, the main part of the project. Secondly, there would be a Revenue Collection Agency, in charge of keeping and administering the money collected. Thirdly, there would be an External Trade and Customs Agency, in charge of border inspection and custom duty payments. Finally, there would be a Property Agency, supervising all the real state in Catalonia. Above all of them there will be the Catalan Service of Revenue Management and the Treasury Council, formed by politicians but also by independent experts and civil servants, explained Iglesias.