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An urgent reform

The new regional financing has to guarantee the welfare state

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An urgent reform

The reform of regional funding has become a real political nest in recent months. The reasons for this autonomic bitterness are several, but two stand out. The first and foremost is absurd and negligent delay of government in addressing a problem, that of imbalance of financing between autonomy, which constitutes a time bomb capable of producing serious political tensions in short term. The awkwardness of government cannot be excused in emergence of Catalan problem, however serious this is. Only justification can be made for such irresponsible postponement (more than two years): that government lacks a clear criterion for dealing with complex and potentially conflicting reform.

The second reason for political curl of autonomy is approval of a Basque quota, which has underlined financial deficiencies of or autonomies. Public perception is that government pays with overfinancing, calculated in addition to a very untransparent form, political support of PNV at some delicate moments. Some autonomic governments have discovered what has long been apparent: that re is no standardized funding system to pay for public services in charge of autonomy; That such funding is bilateral and responds to arbitrary compensation, with little relation to real spending needs, in exchange for political support. Some communities have fallen into account, Estupefactas, that if yesterday y were suprafinanced today y have fallen in under (Valencia); Ors like Andalusia are waiting for resources that never arrive.

Previous Editorials

Fiscal Opportunism (24/11/2017)

New Financing (18/09/2017)

Pact Solidarity (31/07/2017)

In a hurry that government is now giving, new system is likely to be unprepared in this legislature. What matters is that re are clear ideas about how to proceed and that re is scope for agreement. The first step (and hardest one) is to determine degree of solidarity between territories that new system must have. The second step, in line with recommendations of Committee of Experts, must be institutional simplification. Enough with a fund, guarantee, and perhaps remaining three have to be recast into one, to clearly calculate expenditure per unit depending on population adjusted in each territory. Income must guarantee welfare state in each territory. To this end, it is obligatory to harmonize taxable and liquidatable bases of taxes ceded. Autonomic governments must be able to raise VAT and excise duties, but in a collegiate way, to avoid serious differences between communities. Debt capacity must be limited (thus it would not be necessary to waive debt, as proposed by Iceta), and to encourage fiscal co-responsibility.

The resulting funding system must be based on a standard procedure, pre-determined in each of its calculations and adjustments, with little leeway for political arbitrariness. And it must have a stabilization mechanism in recession or crisis phases. The absence of such a mechanism has aggravated perceived differences in one and or communities.

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