The regional fiscal balances presented to the press are mainly targeted to chide the Catalonian government for claiming the region is heavily penalised in fiscal terms. It reduces to 8 billion the net fiscal deficit for Catalonia, slicing in half the amount advanced by its authorities,well below the negative balance supported by Madrid regional government.
The study has been undertaken on a cost-benefit basis, splitting expenses according to potential use by citizens. Thus, the high-speed railway from Barcelona to Madrid is supposed to benefit passengers in both cities rather than the areas where investment was made. Such an approach needs to rely on conventions open to challenge. For, it seems rather difficult to ascertain how people living outside Madrid can profit from the Prado Museum budget. The assumption that 25% of overall expenses benefits them on a GDP breakdown basis, amounts to mere wishful thinking. Yet, most public budget items can be split in a rather reasonable way.
Most expenses, such as pensions indemnities, education and health, can be attached to territories according to the number of potential or real beneficiaries. The study neutralises the effect of overall deficit by supposing a balanced budget. It splits tax income, according to the region where taxpayers live. Corporate tax receipts are evenly split between consumers, enterprises and workers. All in all, the breakdown leads to a fairer view than simple nominal fiscal balances. Yet, it has the potential to ignite bitter bickering over futile issues.
For all its merits, publishing this controversial study puts the lid over any attempt to defuse the self-rule wrangle by offering better budgetary conditions to Catalonia. Thus, it seems we are heading for full fledged confrontation. As the Catalonian government is deprived of a face-saving way out, it might be forced to embrace a radical road to independence. There is little hope the meeting between Rajoy and Mas can find a middle-of-the-road solution, when no money is put on the table.