1 Instituto de Estudios Fiscales (2006), Informe sobre Metodología de Cálculo de las Balanzas Fiscales, p.9. It can be downloaded in Spanish from http://www.minhafp.gob.es/Documentacion/Publico/GabineteMinistro/Varios/Metodologia_BalanzasFiscales.pdf.
2 Generalitat de Catalunya (2017), Els Resultats de la Balança Fiscal de Catalunya amb el Sector Públic Central els Anys 2013 i 2014, http://economia.gencat.cat/web/.content/70_analisi_finances_publiques_balanca_fiscal/arxius/resultats-BF-2013-2014.pdf.
4 See González Calleja, E. et al. (2015), La Segunda República Española, Ediciones de Pasado y Presente, pp. 660-661, where it is reported that between 1929 and 1935 GDP remained flat, peaking the unemployment rate at 7 percent in the worst moment of the crisis.
5 Source: Instituto Nacional de Estadística (INE) for the regional unemployment rate and Centre d’Estudis d’Opinió (CEO) for the support for independence. The support for independence figure has been taken from a regular survey (Political Opinion Barometer) asking the question “Do you believe that Catalonia should be…?” The observations for 4Q’11, 3Q’12, 3Q’13 and 3Q’14 have been taken from the previous quarter, due to missing observations.
6 As the Huffington Post (2017) shows, “Spain is robbing us” has been “[o]ne of the most successful slogans in recent years”. See https://www.huffingtonpost.com/entry/catalonia-independence-referendum-things-to-know_us_59cd4b15e4b0300a59ac149d.
7 Generalitat de Catalunya (2012), Resultados de la balanza fiscal de Cataluña con el sector público central 2006-2009, http://economia.gencat.cat/ca/70_ambits_actuacio/analisi_finances_publiques/la_balanca_fiscal_de_catalunya_amb_l_administracio_central/.
9 See de la Fuente (2014), Is Catalonia being Fiscally Mistreated?, Barcelona GSE Working Paper Series Working Paper nº 766.
10 Even though there are some differences as how receipts are treated, the main difference between the two approaches come as result as to how government expenditures are treated.
11 Even though years have passed and fiscal balances figures have changed, the numbers of the 2009 are the ones still bandied about, especially the 16.000 million plunder.
12 Source: Generalitat de Catalunya (2016), Els resultats de la balança fiscal de Catalunya amb el sector públic central
l’any 2012, p. 18. http://economia.gencat.cat/web/.content/70_analisi_finances_publiques_balanca_fiscal/arxius/resultats-BF-2012.pdf. We do not take into account here the latest numbers published in Generalitat de Catalunya (2017), ibídem, because these numbers were not known at the time. The latest numbers are in line with the ones shown here up to 2009; from there on, there are small discrepancies due to (presumably) revisions that do not bear any influence on the issue discussed here.
13 Instituto de Estudios Fiscales (2006), ibídem.
14 Instituto de Estudios Fiscales (2006), ibídem.
15 Instituto de Estudios Fiscales (2006), p.9 and p.92.
16 One of the most intriguing questions still to be explained is why there remains a serious inconsistency in the documents provided to the Spanish senate, inconsistency that should have been addressed. As part of the effort for the creation of the methodology and to help the group of experts, the Working Group commissioned Ramón Barberán –one of the member of the working group- to prepare a document reviewing past efforts on creating fiscal balances and the theoretical soundness of it all. This review document is attached to the main body of the Report. In it, Mr. Barberán clearly states that “all of which inevitably leads to identifying the burden-benefit approach as the ideal one for calculating fiscal balances and discarding other approaches (collection-payment approach, burden-expenditure approach and income-expenditure approach)… Therefore, interest in macroeconomic effects would not justify the application of discarded approaches, in particular the burden-expenditure approach, that simply puts research outside the scope of fiscal balances to place it in the scope of regional accounting (regional accounts of the central public administration), in which the calculated magnitudes have a precise macroeconomic meaning” (p.144).
The burden/expenditure approach in the quote is the monetary flow approach we are considering.
17 Generalitat de Catalunya (2005), La Balança Fiscal de Catalunya amb L’Administració Central. http://economia.gencat.cat/web/.content/documents/arxius/document_del_grup_de_treball_2005_catala.pdf.
19 Generalitat de Catalunya (2012), ibídem.
20 Borrell,J. & Llorach, J. (2015), Las cuentas y los cuentos de la independencia, Editorial La Catarata.
21 These reports can be found in Spanish for the years 2011-2014 in http://www.minhafp.gob.es/es-ES/CDI/Paginas/OtraInformacionEconomica/Sistema-cuentas-territorializadas-2014.aspx.
22 As Barberán states, “The flow approach, on the other hand, has traditionally been defended on the grounds that it serves to evaluate the macroeconomic impact caused by the budgetary activity of the central government in each region. However, the suitability of this approach for this purpose does not stand up to critical analysis, and as such seems dispensable. Recently, in fact, it has been attributed another purpose: the quantification of the fiscal dividend of a region’s independence. But there are several contraindications to accept that the net fiscal flow from the flow approach is the equivalent of this dividend.” Barberán, Ramón (2014), The Methodological Debate on Inter-regional Fiscal Balances: An Element of Confusion for the Citizens, Institut d’Economia de Barcelona. http://www.ieb.ub.edu/es/20140723370/noticias/diferencies-metodologiques-per-elaborar-balances-fiscals-objecte-del-darrer-ieb-report#.Wf5AMmjWzIU.
24 Separatist economists sometimes recognize this, but counteract saying that at least this creates jobs in Catalonia, hindering the fact that these expenditures, instead of being a benefit, they are a use of resources not particularly productive.
25 The Spanish market of pharmaceutical specialties in 2009 amounted to 14,863 million euros at laboratory prices – i.e. excluding margins of distributors and pharmacies (Farmaindustria (2011), Annual report, p.132). If we add another 1,700 million in other hospital supplies related not strictly to pharmaceutical specialties, we obtain a total of 16,563 million, of which 75 percent correspond to the public health system. That is, the public health system spent a total of 12,422 million euro of these products. The Catalan pharmaceutical industry accounts for 60 percent of the Spanish total (to give an idea of its relative importance), which would mean 7,453 million euros of public purchases to Catalan pharmaceutical companies.
26 Andalusia’s population is roughly 18 percent of Spain, so we can approach the expenses on Catalan products to 2.5–2.9 billion euros.
27 In economics, a transfer payment is “a transaction in which one institutional unit provides a good, service or asset to
another unit without receiving from the latter any good, service or asset in return as a direct counterpart” (System of National Accounts, 2008, p.161). These payments are considered to be non-exhaustive because they do not directly absorb resources or create output. The proper way to compute a fiscal balance is to net the negative transfers you incur (taxes and similar payments that have no relation to any economic activity you provide to the state) with the positive transfers received (monetary payments like pensions, unemployment insurance and subsidies, and transfers in kind, as health and education services).
28 In Germany, however, regional transfers should be considered, since there are transfers between the Länder to execute the appropriate fiscal leveling, as Länder collect personal income taxes and VAT.
29 Although, alas, this is also being less and less the case. Consider, for instance, the wave of studies published since 2010 to provide a justification for the austerity policies enacted across Europe. See Blyth, M. (2013), Austerity. The History of a Dangerous Idea, chapter 5, for a summary of this literature.