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In-Depth Information
nationalist opposition (CiU). Therefore, the core model of the CoC was ulti-
mately retained in Law 3/2009, Regional Financing for ACs. The scope of ceded
taxes is only marginally adjusted, as described in
Table 7.4
. More importantly,
the new model limited the scope of redistribution within the system. Interre-
gional redistribution of resources was limited to core policy programs (health,
education, and social services) rather than extending to overall expenditure
needs, as before. This would ensure that the system of regional financing did
not alter the relative position of Catalonia in terms of income per capita, as
requested by art. 208 of the CoC.
31
In turn, agreement of the potential net
losers of the reform (top left quadrant in
Table 7.7
) was secured through the
central government's commitment to cover the gap in redistributive effort cre-
ated by the limitation of equalization to health, education, and social services.
32
Put simply, the central government assumes the cost of limiting net contribu-
tors' redistributive burden. This required, once again, increasing the amount of
resources in the system so that no one is worse-off in absolute terms (hence, for
instance, the passive support of the Galician regional government in the form
of abstention, and the endorsement of the reform by all socialist regions).
The Resilience of Social Security
Spain's fiscal structure history since the early 1990s is one of progressive reduc-
tion of a highly redistributive system. Analysis of the distributive consequences
of Spain's fiscal structure (
Figures 7.2
) revealed two mechanisms: the collection
and allocation of revenues across governments, and social security (
Figure 7.3
).
The bulk of the third section has analyzed the political process of adjusting the
regional financing system. Curiously, in the midst of major reforms of the rev-
enue allocation system, Social Security remains entirely a national program.
The reason is simple. Even when national parties faced the most complicated
negotiations to form a stable government, they consistently refused to compro-
mise on social security.
In 1993 the socialists failed to reach an agreement with the Basque national-
ists (PNV). The latter's demand to collect and manage social security revenues
met flat refusal by the socialists (PSOE): “the management of Social Security
is what guarantees solidarity among territories.”
33
In 1996, the conservatives
(PP), despite their eagerness to rule, did not compromise on social security
either. The PNV demanded the transfer of the capacity to manage a subset
of social security contributions (the Fondo de Garantia Salarial, for instance).
31
This article has been recently striken down by the Constitutional Court in its ruling on the
Constitution of Catalonia that partially accepts some of the objections raised by the conservative
party (PP) after its approval in 2006. Art. 208 is the only important aspect of the new regional
financing system that was invalidated by the Court. The rest of the system approved in Organic
Law 3/2009 remains in place.
32
Technically, this is done through transforming the existing Fondo de Suficiencia into the new
Fondo de Suficiencia Global.
33
Source: El Pais
November 15, 1993.
