>IN TRANSIT. Eurocatalan newsletter

>Money Matters

It seems like a new problem, but it isn’t. It is actually an issue that has never been properly resolved between Catalonia and the Spanish State: the fiscal deficit. The enormous difference between what Catalonia pays the central government and what Catalonia receives in return has been a common thread throughout history. There are many incidents that offer convincing proof of this imbalance all the way up to the present.

For example, in 1843 Lo Verdader Català (‘The True Catalan’) was launched: a magazine dedicated to denouncing Catalonia’s economic problems. The cover of the first issue shows a disheartened Catalan and the following caption: “On the ground the Catalan observes his industry, commerce, and agriculture with sadness.” The magazine went bankrupt almost immediately due to a lack of funding and because the founders came under significant pressure. It wasn’t until the beginning of the 20th century that the economist Guillem Graell became the first person to carry out a careful study of the uneven fiscal balances and… he felt a chill when he saw how much discrimination Catalonia suffered from. The arrival of the Second Republic didn’t solve anything either. And paradoxically, in the middle of Franco’s dictatorship in 1961, a young economist, Ernest Lluch (future Minister of the Socialist Government of Felipe González) asked himself: “does Catalonia exploit Spain?” The answer he found was that although 25% of Spain’s tax revenues came from Catalonia, only 45% of the Catalans’ contributions were returned to Catalonia, thus making it impossible for the Catalans to fund adequate economic and social services. In 1967, the first exact figure of the fiscal deficit is supplied by Ramon Trias Fargas (future Finance Minister of the first democratic Generalitat of Catalan President Jordi Pujol): 15 billion pesetas.

The Spain that sails into democracy disembarks with the economic and social formula ‘café para todos’ (‘coffee for all’). It is an unequal, imbalanced, model that waters down autonomies like Catalonia. The result is that today Catalans suffer a fiscal deficit that has reached 18 billion euros, some 2,400 euros per person each year. What does this mean?

Historically, with the Catalans’ money the rest of Spain has been able to pay for improvements in social services, infrastructure (highways, TGV, etc.), and social well-being (schools, hospitals, etc.). Said differently: they have become modernized and have moved closer to Europe. But now, futher accentuated by the economic crisis, Catalonia is watching and agonizing over how the fiscal deficit is suffocating it more than ever. It is sensing how the autonomous system is slowly leaving it with less and less oxygen. Could we then say that the ‘State of the Autonomies’ is a product in a ‘bad state’? The articles that appear in this issue of InTransit show us – from different perspectives – how the fiscal deficit (a key factor in the crisis of the autonomies) is a very real and grave problem for Catalonia. Maybe something has gone awry when a part of Europe, well into the 21st century, continues to practice the same politics it has been using for centuries.


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