Friday, February 22, 2013

Why Catalonia needs its independence right away

Can you imagine a country where its Central Government approves a 0% tax (that's right, a zero % tax) for banks so no "autonomous" region can tax banks in the future?

This is what happened in the Banana Kingdom of Spain. Three autonomus regions (Canary Islands, Extremadura and Andalusia) were taxing bank deposits.

Catalonia intended to do the same.

Then Madrid wrote a new law enforcing a "0% tax" that eliminates the possibility for regions to tax banks (according to the bizarre Spanish legislation, no one can pay taxes to two different administrations for the same revenue). Furthermore, the new law planned to compensate regions already having those revenues.

Before that law is approved -in December 2012- Catalonia approves its own law to tax banks. Then Madrid's government appeals to the TC ("Tribunal Constitutional") and just by this the new Catalan law is automatically ruled out (by another bizarre Spanish law the central government can decimate autonomous government laws just by appealing to the TC and not the other way around).

Then the Central Spanish Government finally approves its new law taxing banks at 0%. At the same time a minister of this government says that "of course" Catalonia will not be compensated as the other three regions will.

Revenues of €500 million is what the "autonomous" Catalan government will not collect this year due to this new Spanish Government law and appeal to the TC. This is more the twice of cuts in education anticipated for this year in Catalonia and about the same amount that has been reduced in the last year in Catalan public health care.

At the very same time, another Madrid's appeal to the TC eliminated a one euro tax per prescription that used to save €400 million/year to Catalan tax payers (20 millions collected and 400 million savings in subsidized drugs).