Catalonia’s fiscal deficit with the State rose to 20,196 million euros in 2019, 8.5% of GDP, according to estimates made by the Department of Economy and Hisenda in a study advised by experts. That percentage is half a point higher than the average since 1986, an element that evidences, according to the ‘conseller’ of Economy and Hisenda, Jaume Giró, the situation of “obvious chronic injustice that it is necessary to remember and denounce.” The data is “an estimate”, according to the authors of the study, given that since 2016 the State has not sent the Autonomous Communities specific information on the evolution of the fiscal balances. Giró urged the PSC to press for the Ministry of Finance to publish the fiscal balances and “not to sacrifice transparency for the tension that this information can generate.” “Self-government is based on having the resources generated in the territory and the current situation is the most serious procedure of political control,” he said.
According to the Government’s calculations, Catalonia contributed 19.6% of its total income to the State, while it received 13.4% of the expenditure made in the State as a whole. The study compares the data with that of 2016 and estimates what corresponds to 26% of spending that is not known. What the authors of the study do is estimate that the expenditure was similar to that made in 2016. It also avoids the study of what happened in 2020 and 2021, as they are atypical years due to the coronavirus pandemic. The results “are consistent”, according to the authors of the analysis, with the evolution of the data in recent years.
The calculation of the fiscal balance elaborated is based on the method of the monetary flow j (as opposed to the charge-benefit method). The elected computes as expenditure only that which is effectively made in the territory. According to the second method of calculation, the deficit would be around 14,556 million euros, 6.1% of GDP (compared to 5.7% of GDP in 2016). The study authors consider that second estimate to be less precise.
The balance shows the difference between the spending that the state public sector carries out in a territory and the volume of income it obtains from this territory, and with which it finances all of its public spending. There is a fiscal deficit when the income obtained in a territory exceeds the expenses allocated to this territory. The analysis breaks down and quantifies the income and expenses of Social Security, the volume of investment executed by the State and the territorialized income and expenses of the State and its agencies and entities. A part of the territorialized expenditure has had to be estimated, since since 2016 the Spanish Government has not published or sent to the Generalitat part of the data necessary to calculate the balance.
In the case of these unavailable data (approximately a quarter of the total), and in accordance with the recommendations of the group of experts that developed the methodology for calculating the balance, it has been decided to allocate the expenses of 2019 in accordance with the average of the imputation percentages for the years 2015 and 2016, which are the last in which the Spanish Government provided the necessary data to carry out the calculation.
The analysis of the items of income and expenses of the Administration indicates a certain stability, thanks largely to the recovery of the labor market. In the opinion of Núria Bosch, PhD in economics and professor of public economics at the UB who participated in the study, the methodology used “is fully justified” as it was based on the unknown data of the average territorialized investment of 2015 and 2016 assuming that it has not changed excessively. The most volatile investment itself was known. The general allocation of general investments is made by population and its impact on the surrounding area. Expenditure is also allocated based on where it is made, regardless of the situation of the business headquarters, for example.
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From a technical point of view, the economists who have participated in the study have “neutralized” the impact of the deficit by adjusting income to the level of spending, understanding that “the existence of deficits will lead in the future to an increase of the incomes”.
According to the ‘conseller’ of Economy, Jaume Giró, it is necessary to contextualize this study with the deficit of accumulated public investment in infrastructures. In addition, Catalonia ended the year, assured Giró, as the penultimate autonomy in State investment and second in tax collection per capita. The calculated deficit is equivalent to the Government’s Health, Education and Social Resources budget each year.