“There is no fiscal dumping, what exists are differences”


Posted: Saturday, December 5, 2020 06:31

The debate on tax harmonization permeates the political environment, accusations by defenders of the current tax model in our country and criticism that the Community of Madrid is allegedly committing what is called fiscal dumping. Amid the hubbub, former finance minister Cristóbal Montoro raises his voice during an interview with laSexta.

He also does it bluntly: “It cannot be because there are elections in Catalonia that we are talking about dumping in the exercise of fiscal co-responsibility. It doesn’t exist, there are differences ”.

“We are a country of provincial domains, which are unique in the world. We are a country where the autonomous communities of common regime have differences, and they must have differences ”, deepens the one who was responsible for the Public Treasury in two governments – between 2000 and 2004 with Aznar; between 2011 and 2018 with Rajoy-.

We are a country where common regime communities have differences, and they must have them

Montoro, architect of the autonomous financing system that transfers property taxation with regulatory capacity to the communities, which was approved in the year by the Socialists, the Catalan nationalists and the Coalition of the Canary Islands, radically rejects the accusation that puts in light to Isabel Díaz Ayuso and her financial advisor, Javier Fernández-Lasquetty, both self-proclaimed economic liberals.

In fact, one of the great pillars of Ayuso’s leadership at the head of the regional government of Madrid is precisely to reduce taxes to the maximum.

Catalonia collects almost 50% more than Madrid

“What an abnormal and strange concept of dumping, when in the financing system of the guarantee fund there are calculations on hypothetical valuations!”, Ironically Montoro. “If you, as an autonomous community, reduce these taxes, you have less budgetary income … This is what is happening in Madrid, for example.”

In this way, Catalonia, “which collects, on its own resources, nearly 50% more than in Madrid, will obtain an advantage in the public services available to the Catalans”, explains the former minister. “What if they still don’t have better public services [que Madrid]Well, that’s what the Catalans must ask their leaders ”.

The financing system put in place by the former Minister of Finance was revised in the following years. Specifically, in 2009, with a new model approved in July of the same year, under the tenure of José Luis Rodríguez Zapatero. But the element of asset transfer has not been changed. At that time, the same Esquerra who now accuses the regional leader of Madrid “agreed”.

In previous tax model reforms, the ERC accepted

“The bonuses had already started in Madrid [con los gobiernos de Esperanza Aguirre] and they didn’t care, ”recalls Montoro in his interview with LaSexta. “But that’s because there are elections in Catalonia,” he said.

So Cristóbal Montoro makes his opinion very clear. “My criterion is that there must be differences and that they correspond to that”, he underlines, and explains: “What you have to know is that what each community contributes in property taxes is calculated on the basis of a hypothetical fact of It should be so, so what the tax relief does is that it decreases the income of this Autonomous Community for its budget, ”he goes on to say,“ but this does not detract from the contribution of the autonomous community to the guarantee fund, which is done on a hypothetical scenario in this calculation ”.

The former minister is aware of the difficulty of the terms of his explanation. “It’s complicated, but life is complicated,” he laughs. “Later, an Esquerra deputy expert comes out, who knows a lot about this topic – ironically – and throws up topical issues. It’s just that the math isn’t even done like that! “.

What is fiscal dumping

Santiago Carbó, professor of economics at the University of Granada, explains for this channel what fiscal dumping consists of: “It artificially supports the competitiveness of your companies by lowering taxes.”

We pay regional taxes every time we flip a switch, put on gas, have a beer, or smoke. The Autonomous Communities are also responsible for 50% of personal income tax and VAT.

75% of regional tax revenues go to the common piggy bank of all communities

However, it should be noted that all this money coming from regional taxes does not stay in the Community where one resides, but that a quarter of the income is intended for the territory which generates it and the remaining 75% goes to the common piggy bank, that the government then redistributes.

The scope for reducing or increasing other taxes, such as inheritance, inheritance, and donation, is absolute. Some communities grant 100% of taxes. This is the case in Andalusia, where there is no tax to receive an inheritance of 800,000 euros, while in Asturias more than 100,000 euros are paid.

In this sense, Ángel de la Fuente, economist and president of ‘Fedea’ underlines that “there are governments that can increase taxes and there are other governments that legitimately decide to do the opposite: reduce taxes in logical cost of reducing services or having worse benefits. “.

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