Title VI. Funding of the Generalitat
Chapter I. The finances of the Generalitat
Chapter II. The budget of the Generalitat
Chapter III. Local government finances
Chapter I. The finances of the Generalitat
THE RESOURCES OF THE GENERALITAT
- Taxation and financial relations between the State and the Generalitat are regulated by the Constitution, by this Estatut and by the organic law referred to in Section 3 of Article 157 of the Constitution.
- The funding of the Generalitat is governed by the principles of financial autonomy, coordination, solidarity and transparency in fiscal and financial relations between the Public Administration bodies, and also by the principles of sufficiency of resources, fiscal responsibility, equity and institutional loyalty between the afore-mentioned Public Administration bodies.
- The development of the contents of this Title is the responsibility of the State - Generalitat Joint Economic and Fiscal Affairs Commission.
- In accordance with Article 138.2 of the Constitution, the financing of the Generalitat shall not entail discriminatory effects for Catalonia with respect to other autonomous communities. This principle shall fully respect the criteria of solidarity set out in Article 206 of this Estatut.
- The Generalitat has autonomous finances and sufficient financial resources for the proper exercise of self-government.
- The Generalitat enjoys full autonomy of expenditure so that it can use and apply its resources freely, in accordance with the political and social guidelines set by its self-government institutions.
- The financial resources of the Generalitat consist of:
- Taxation income, rates, special charges and other taxes raised in Catalonia.
- The income of all ceded State taxes, in accordance with the provisions of Article 201 of this Estatut.
- Surcharges on State taxes.
- Revenues arising from the Inter-Territorial Compensation Fund and from other allocations established by the Constitution, as appropriate.
- Other transfers and allocations charged to the general budget of the State.
- Revenues from payments for public services.
- Incomes earned on the assets of the Generalitat.
- Private law revenues.
- Income yielded by debt issues and credit operations.
- Revenues arising from fines and sanctions applied in areas falling within its powers.
- Resources originating from the European Union and from community programmes.
- Any other resource that may be established by virtue of the provisions of this Estatut and the Constitution.
THE TAXATION AGENCY OF CATALONIA
- The Generalitat has the capacity to determine the volume and composition of revenues falling within its financial powers, and also to freely apply its resources to expenditure items as it deems fit.
- The Generalitat participates in the income arising from State taxes ceded to Catalonia. To this end, these taxes are as follows:
- Totally ceded taxes, that is, taxes the entire income and regulatory power of which corresponds to the Generalitat.
- Partially ceded taxes, that is, taxes part of the income of which and, where appropriate, regulatory power of which corresponds to the Generalitat.
- Within the framework of the powers of the State and of the European Union, exercise of the regulatory power referred to in Section 2 includes participation in establishment of the tax rate, exemptions, reductions and rebates on the tax base and deductions in the quota.
- The Generalitat is responsible for the management, collection, settlement and inspection of totally ceded State taxes and the same functions in the measure attributed, in accordance with the provisions of Article 204, regarding partially ceded taxes.
- The Generalitat has the power to establish, by means of an Act of Parliament, its own taxes, over which it has regulatory power.
- The regulatory power of the Generalitat to act in the taxation sphere is based on the principles of equity and efficiency. In its taxation policies, the Generalitat promotes social cohesion and welfare, economic progress and environmental sustainability.
- The Taxation Agency of Catalonia is responsible for management, collection, settlement and inspection of all Generalitat of Catalonia taxes and also, when delegated by the State, of State taxes which are totally ceded to the Generalitat.
- The Taxation Administration of the State is responsible for management, collection, settlement and inspection of other State taxes collected in Catalonia, without prejudice to any delegation to the Generalitat in this respect or to any collaboration that may be established especially when required by the nature of the tax.
For implementation of the content of the previous paragraph, a consortium, or an equivalent entity, shall be constituted, within two years, with parity of participation by the Taxation Administration Agency of the State and the Taxation Agency of Catalonia. The Consortium may be transformed into the Taxation Administration in Catalonia.
- The two taxation administrations shall establish the necessary mechanisms to permit presentation and reception in the respective offices of tax forms and other taxation-related documentation which may have a bearing on the other administration, with a view to facilitating compliance with tax obligations on the part of taxpayers.
The Generalitat participates, in the form to be established, in the State taxation entities or bodies with responsibility for management, collection, settlement and inspection of partially ceded State taxes.
- The Taxation Agency of Catalonia shall be created by means of an Act of Parliament and shall have full power and attributes for organisation and exercise of the functions referred to in Section 1.
- Management functions in relation to local taxes may be delegated to the Taxation Agency of Catalonia by the municipalities.
The Generalitat shall assume, by means of its own economic-administrative bodies, the administrative review of claims that may be made by taxpayers against the acts of taxation management of the Taxation Agency of Catalonia.
The above shall be without prejudice to the powers of the General Administration of the State in relation to unification of criteria.
To this end, the Generalitat and the General Administration of the State may also agree the necessary cooperation mechanisms as necessary for appropriate exercise of the functions of economic-administrative revision.
PARTICIPATION IN INCOME FROM STATE TAXES AND LEVELLING AND SOLIDARITY MECHANISMS
- The level of financial resources available to the Generalitat for funding of its services and powers shall be based on criteria of expenditure needs and shall take its taxation capacity, among other criteria, into account. To this end, the resources of the Generalitat are, among others, those deriving from its taxation revenues, increased or reduced in accordance with its participation in the levelling and solidarity mechanisms.
- The Generalitat participates in the income deriving from ceded State taxes. The percentage of participation is established taking its services and powers into account.
- The financial resources available to the Generalitat may be adjusted to enable the State financing system to have sufficient resources to ensure levelling and solidarity with other autonomous communities, so that the education, health, and other essential social services of the welfare state provided by the different autonomous governments can achieve similar levels throughout the State, provided that they also make a similar fiscal effort. Similarly, where appropriate, the Generalitat receives resources from the levelling and solidarity mechanisms. The afore-mentioned levels shall be established by the State.
- The levelling and solidarity mechanisms shall be determined in accordance with the principle of transparency, and the results shall be evaluated every five years.
- The State shall guarantee that application of the levelling mechanisms shall in no case alter the position of Catalonia in the pre-levelling ranking of per capita earnings.
- In determining the expenditure needs referred to in Section 1, the population, adjusted for differential costs and demographic variables, and in particular by means of a correction factor based on the percentage of immigrants in the population, shall be taken into account, as a basic variable. Likewise, population density, the size of urban nuclei and the socially excluded population shall also be taken into account.
The Generalitat enjoys the fiscal treatment established by law for the State regarding State taxes.
UPDATING OF FUNDING
- The State and the Generalitat shall update the funding system every five years, taking into account the evolution of the available public resources as a whole and that of the expenditure needs of the different administration bodies.
This updating shall be carried out without prejudice to monitoring and possible updating of the basic variables employed for determination of the resources provided by the funding system.
- The updating referred to in Section 1 shall be approved by the State - Generalitat Joint Economic and Fiscal Affairs Commission
ARTICLE 210. THE STATE - GENERALITAT JOINT ECONOMIC AND FISCAL AFFAIRS COMMISSION
- In accordance with the principle of institutional loyalty, the financial impact, whether positive or negative, of the general provisions approved by the State on the Generalitat, and of those approved by the Generalitat on the State, shall be assessed, over a period of time in terms of variations of expenditure needs or fiscal capacity, with a view to establishing the necessary adjustment mechanisms.
- Both administrations shall mutually facilitate access to the necessary statistical and management information for best exercise of their respective powers, in a framework of cooperation and transparency.
- The State - Generalitat Joint Economic and Fiscal Affairs Commission is the bilateral body for relations between the Administration of the State and the Generalitat in the field of autonomous community funding. It is responsible for specification, application, updating and monitoring of the funding system, and also for channelling the entirety of fiscal and financial relations between the Generalitat and the State. It consists of an equal number of representatives of the State and of the Generalitat. Presidency of this Joint Commission rotates between the two parties for terms of one year.
Internal regulation and functioning of the Commission is by agreement between the two delegations. The State - Generalitat Joint Economic and Fiscal Affairs Commission performs its functions without prejudice to agreements signed by the Government of Catalonia in this matter within multilateral institutions and bodies.
- The State - Generalitat Joint Economic and Fiscal Affairs Commission is responsible for:
- Agreeing the scope and conditions for cession of taxes owned by the State and, especially, the percentages of participation in the partially ceded State taxes referred to in Article 206, and also their revision every five years.
- Agreeing the contribution to solidarity and levelling mechanisms referred to in Article 206.
- Establishing the mechanisms for collaboration between the Taxation Administration of Catalonia and the Taxation Administration of the State referred to in Article 204, and also the criteria for fiscal coordination and harmonisation in accordance with the characteristics or the nature of the taxes ceded.
- Negotiating Catalonia's percentage of participation in the territorial distribution of European structural funds.
- Applying the updating mechanisms established by Article 208.
- Agreeing the valuation of services transferred by the State to the Generalitat.
- Establishing the necessary collaboration mechanisms between the Generalitat and the Administration of the State for appropriate exercise of the functions of economic-administrative revision referred to in Article 205.
- Agreeing the collaboration mechanisms between the Generalitat and the General Administration of the State for exercise of the land registry functions referred to in Article 221.
- In accordance with the provisions of Article 209, the State - Generalitat Joint Economic and Fiscal Affairs Commission shall propose the co-operation measures necessary to ensure balance in the funding system established according to this Title when this may be altered by State or European Union legislative decisions.
- The Catalan component of the State - Generalitat Joint Economic and Fiscal Affairs Commission is accountable to Parliament concerning compliance with the requirements of this Chapter.
Chapter II. The budget of the Generalitat
POWERS OF THE GENERALITAT
The Generalitat has exclusive power over planning and regulating its finances.
THE BUDGET OF THE GENERALITAT
The Generalitat budget is annual, unique and includes all expenses and revenues of the Generalitat, and also those of the bodies, institutions and companies that are accountable to it. The Government is responsible for drawing up and executing the budget and Parliament is responsible for examining, amending, approving and controlling the budget. The Budget Act cannot create taxes, but can modify them if a substantive tax law so establishes.
RESORT TO DEBT
- The Generalitat may have recourse to loans and may issue public debt to finance expenditure, within the limits set by the Generalitat itself and respecting the general principles and State regulations.
- The securities issued shall, for all purposes and effects, be considered as public funds and shall enjoy the same benefits and conditions as those issued by the State.
The Generalitat is responsible for setting limits and conditions for achievement of the aim of budget stability, within the principles and regulations of the State and the European Union.
THE ASSETS OF THE GENERALITAT
- The assets of the Generalitat consist of the goods and rights that it owns and those that it acquires by any legal title.
- An Act of Parliament shall regulate the administration, protection and preservation of the assets of the Generalitat.
The Generalitat may form publicly-owned companies to fulfil the functions that are within its powers, as established in the Acts of Parliament.
Chapter III. Local government finances
Local finances are governed by the principles of sufficiency of resources, equity, autonomy and fiscal responsibility. The Generalitat oversees compliance with these principles.
ARTICLE 218. AUTONOMY AND FINANCIAL POWERS
SUFFICIENCY OF RESOURCES
- Local governments have autonomy over their budget and the use and application of their resources, including their share of the budgets of other Public Administration bodies, which they may dispose of freely in the exercise of their powers.
- The Generalitat has power in matters of local financing, within the framework established by the Constitution and the State regulations. This power may include the legislative capacity to establish and regulate local government taxes and includes the power to establish the criteria for distribution of shares of the budget of the Generalitat.
- The local governments can regulate their own finances within the framework of the law. This includes the authority to set the quota or rate of local taxes, and also rebates and exemptions, within the limits established by law.
- The local governments have the power, within the framework established by regulations governing the local taxation system, to manage and collect their taxes and implement inspections, without prejudice to their being able to delegate this function to the Generalitat and participate in the Taxation Agency of Catalonia.
- The Generalitat is responsible for financial supervision of local governments, while respecting their autonomy as recognised by the Constitution.
LOCAL FINANCE LAW
- The Generalitat shall establish a local co-operation fund for local governments. The fund, which is unconditional, shall be funded from the general taxation revenues of the Generalitat and shall be regulated by an Act of Parliament.
Additionally, the Generalitat may establish specific financial cooperation programmes for specific matters.
- Local government revenues which consist of shares in taxes and in unconditional State subsidies are received through the Generalitat, which shall distribute them in accordance with the law governing local finances in Catalonia for the passing of which a majority of three-fifth parts is required, and respecting the criteria of State
legislation in this area. In the case of unconditional subventions, these criteria must enable Parliament to influence the distribution of resources with the aim of taking due account of the uniqueness of the institutional system of Catalonia referred to in Article 5 of this Estatut.
- Local governments are guaranteed sufficient resources to be able to provide the services ownership or management of which is transferred or delegated to them. Any new attribution of powers shall be accompanied by allocation of the additional resources necessary for proper funding of these powers, in such a way that total and effective cost of the transferred services are taken into account. Compliance with this principle is a necessary condition for the transfer or delegation of a responsibility to take effect. To this end, various forms of funding may be established, including participation in the financial resources of the Generalitat or, as appropriate, of the State.
- Distribution of resources originating from unconditional subsidies or from general participation in taxes shall be carried in accordance with the fiscal capacity and expenditure needs of local governments, while guaranteeing sufficiency in all cases.
- Under no circumstances shall distribution of resources among local governments involve a reduction in the resources obtained by each, in terms of the criteria used in the financial accounting period before the requirements of this Estatut take effect.
THE LAND REGISTRY
- Parliament shall pass its own Local Finance Act to enact the principles and the provisions established by this Chapter.
- Jurisdiction over local finances attributed by this Chapter to the Generalitat shall be exercised with due respect for local autonomy and with due consideration for the views of the Council of Local Governments, as established by Article 85
The General Administration of the State and the Generalitat shall establish the necessary means of collaboration to ensure the participation of the Generalitat in
the decisions and in the exchange of information required for the exercise of their powers.
Similarly, consortial forms of management of the land registry shall be established between the State, the Generalitat and the municipalities, in keeping with the provisions of the State regulations and in a way that guarantees full availability of the databases to all administrations and the unity of the information.