Asturias, among the communities affected by new regional financing

Experts from more than 20 Spanish and international universities, the Bank of Spain and the Foundation for Applied Economics Studies (Fedea) urge the simplification and establishment of a “clear” criterion of equity between Autonomous Communities (CCAA), and propose the creation of a ‘piggy bank’ for them to turn to in times of crisis in order to maintain basic services, among the measures to be included in the reform of the regional financing model.

With this reform, communities such as Asturias, Cantabria, Galicia, Extremadura and La Rioja, which benefit from the current model, would be harmed, compared to others such as Valencia or Murcia, which are currently the worst financed and would gain from the change.

These are some of the proposals included in the 30th volume of the collection of Estudios Mediterráneo Económico “Autonomic financing: problems of the model and proposals for reform”, presented this Wednesday by the executive director of Fedea, Ángel de la Fuente, and the president of Cajamar, Eduardo Baamonde, whose entity publishes the volume of 481 pages.

The study, coordinated by De la Fuente and the professor of Public Economics at the University of Zaragoza, Julio López Laborda, includes several proposals for the reform of the current financing system of the autonomous communities of the common system, compared to a current model characterized by the “arbitrariness” in the distribution of resources between regions, a “clear” deficit of autonomy and fiscal responsibility on the part of the Autonomous Communities and the absence of a “reasonable” mechanism that guarantees a balance in the vertical distribution of resources.

The president of Cajamar, Eduardo Baamonde, has advocated for consensus on alternatives to improve the model to contribute to a “more efficient, equitable and sustainable” economy, and recalled that currently has implemented an “almost federal regime”, as the powers, especially in social matters, they are transferred to the CCAA, which represents around a third of total public expenditure.

Faced with an “extremely complex” political situation, Baamonde has asked for “peace of mind” to reach consensus, since, in addition, from the point of view of income “things are quite complicated” and this is added to the vigilance of the community authorities.

De la Fuente has indicated that it is a “recurrent and very complicated” issue, although, after the system has evolved based on “stumbles and patches”, the time has come to undertake a “well thought out” reform.

Thus, has explained that the proposals with greater consensus among experts to undertake a reform of the system of regional funding point to the need to simplify the current model, to be “incomprehensible to the average citizen.”

In addition, they consider that the objectives of equity of distribution should be “much clearer and more explicit”, and their application should be “more recognizable”, as well as working for the respect of the ordinality principle, since “equality should reflect the inequality of origin “.

All these modifications in the model of regional financing would have to be undertaken in a “gradual” way and without “sudden jumps” to avoid leaving an important part of the budget to certain regions, said De la Fuente, who has indicated that another of the proposals of greater consensus is that the CCAA have an “important” common resource, such as VAT, special taxes or part of the IRPF, which is managed jointly and serves to improve the financial autonomy of the CCAA, have more instruments and contribute to vertical balance.

However, experts believe that the CCAA have to “get wet” when raising taxes and that “citizens perceive it”, since “it is the only way that there is a brake to spend more”, even though entails a cost

Likewise, they are committed to incorporating legacy communities into release mechanisms that contribute to transferring resources to the Autonomous Regions that need them most, as well as adjusting the calculation of spending needs and improving the delivery system on account of liquidations so that the money reaches the regions faster and can respond before cycle changes.

AN INDEPENDENT TAX ADMINISTRATION

Another of the proposals made by the experts, although of smaller consensus, suggests the introduction of a stabilization fund for the autonomous communities that in practice would be a kind of ‘piggy bank’ that they can use to maintain basic services in the times of “skinny cows”.

To improve regional financing they also urge to create a single and independent tax administration, shared between the Government and the autonomous communities, and urge to improve the degree of leveling of the system to analyze how far to equalize the financing between the “rich and poor” communities. , which predictably will unleash the “great political fight”, predicted De la Fuente.

The executive director of Fedea has detailed that the subjects without agreement between the experts are those referred to the calculation of the needs of expense, to the having “enough controversy”, since some bet by introducing the level of prices, the income per capita, to give more weight to the population or prioritize the geographical factors.

The disparity among the experts also occurs in how the system should evolve, a point in which some advocate shielding the revenues of the CCAA by isolating them from the economic cycle, and others believe that it is “impossible” and that the resources of the regions must be distributed. that are available.

There is also no unanimity with regard to the negotiation of the system, since while some experts believe that it should be carried out between the parties, others would see meritorious that the CCAA would be entrusted, although it would be more complicated.

VALENCIA AND MURCIA, WOULD BENEFIT WITH THE REFORM

Asked about the autonomous communities that would benefit the most from a reform of regional financing, De la Fuente explained that the rates of financing per inhabitant adjusted show that regions such as Valencia and Murcia are the ones that suffer the worst financing, so “They should probably win with the change.”

On the contrary, communities such as La Rioja or Cantabria are currently the most benefited regions at the level of funding, although in these a fixed component disappeared from the adjusted population and their indices do not reflect their actual level of funding, has qualified De la Fuente .

In any case, both communities, together with others such as Galicia, Asturias and Extremadura, which are also in the upper distribution line, could be damaged if a reform that establishes a more egalitarian designation is approved.

In any case, De la Fuente has insisted on the consensus regarding the need to reform the model to achieve its simplification and transparency, to achieve “explainable and equitable” results, and the establishment of a clearer criterion of equity, to avoid there is an “abysmal” difference between the theoretical distribution rule and the result in its practice.