Castilla y León is one of the most depopulated regions of Spain. His finance minister, Carlos Fernández Carriedo (Monzón de Campos, 58 years old), believes that the pandemic and European funds have opened an opportunity for the rural world. An economist with a long political career, the PP leader calls for a reform of the regional financing system that gives more weight to dispersion, surface area and aging, and considers that it is time to lower taxes. “It stimulates activity and is the basis for increasing collection,” he says in an interview at his office in Valladolid.
Question. The Supreme Court has given the reason to Castilla y León on the VAT of 2017. When will the State return the money?
Answer. The sentence is very clear. I believe that the rest of the communities could demand it and win just like us. I wrote a letter to the Minister of Finance [María Jesús Montero], offering myself to the mechanism that it deems appropriate to make the payment effective as soon as possible, or a meeting to quantify the figure or to be convened by the Council for Fiscal and Financial Policy if it believes that this amount has to reach all the communities. We have had no response. Time continues to run, and so do interests.
P. Have you already released the call for direct government aid?
R. We have been the second community to remove it, on May 19. We have already sent two lists of requests to the Tax Agency, which has a week to review each one, of 2,184 and 1,188 requests. At the time, we also made three demands on the Government. A fair distribution of funds, because it harms the communities that are better supporting the crisis; expand the number of CNAE, which was finally left to the communities. We have expanded it from 95 to 184. And that the procedure was as simple as possible, and we were ignored.
P. Is there co-governance?
R. We give our ideas. Let’s say we are heard, but we are not heard. The communities have been on the front line of the fight against the virus and we understand that we would have had to be listened to much more when making decisions. Not just hear us.
P. When will the money reach companies and freelancers?
R. What it takes the Tax Agency. We have left the deadline open until July 6. Our goal is to guarantee all those who are in modules at least 3,000 euros, which is the maximum established by the Government. We want Castilla y León to be the guarantee.
P. Will the aid design complicate the arrival of the money?
R. We wanted a simpler procedure. Excluding the self-employed and companies that have been able to maintain themselves in this difficult year thanks to their savings does not seem fair to us.
P. Is it necessary to reform the autonomous financing system?
R. It is necessary and urgent. It does not cover the needs of the communities to provide public services whose spending has grown in recent years, while revenues have not grown by far at the same rate. In Castilla y León, payments on account do not even cover health, education and social services. The higher cost of providing services in rural areas, in dispersed communities, with greater aging, has also been demonstrated. It has to be better considered in the financing system. The one that exists now is insufficient and unfair.
P. Where do you get more resources?
R. We are also awaiting the offer from the Government. But the fundamental source has to come from economic growth. It is the basis for raising more. Therefore, policies that create jobs and growth, which end up causing incomes to rise, the tax bases to widen and more people paying taxes.
P. And how are they to be distributed?
R. We have a shared position with other communities with demographic and depopulation problems. A public service is more expensive when it is provided to older and more dispersed people. We have open educational centers with three students; a person over 80 years old is seven times more expensive than a young person. The weighting of dispersion, surface area or aging must be strengthened if we want to guarantee intergenerational equality and that of the entire territory, that quality services are provided to all.
P. They have several tax deductions for rural areas. Should the communities be given jurisdiction over taxes such as VAT?
R. It is not something we have asked for, but I am concerned that there are communities, the provincial ones, that have more powers than ours. Without questioning its tax regime, the Constitution establishes that it cannot assume any privilege. It seems reasonable to me that the taxes paid by companies respect the principle of market unity and the effort of the communities is directed at what people pay. As long as there are two communities that have regulatory capacities in corporate tax, this never translates into a privilege or, what is the same, a detriment to the rest.
P. They have reduced the inheritance and donation tax to 99%. It was the moment?
R. Yes, because our objective is to promote economic growth. A tax cut stimulates activity and is the basis for increasing collection, while increases do the opposite: they generate insecurity, uncertainty, instability and delay or hinder recovery.
P. What impact will it have?
R. It represents 35 million annual tax savings for families. And they are not 35 million less for the administration, because those families are going to invest, spend. They will pay more for other taxes.
P. Do you have plans for heritage?
R. No. The next phase, which we have already started, is to further reinforce favorable tax treatment for the rural world. It is a priority. We also encourage the Government to implement specific tax measures in the face of the challenge of depopulation.
P. It seems that there is a fiscal race to the bottom between communities. Isn’t it a risk?
R. Lowering taxes does not always mean collecting less, just as raising them does not always mean collecting more, because it depresses the economy and lowers the tax base. The way to finance public services has to be through economic growth. It cannot be that when there is a crisis, the way to finance public services is to raise taxes and exacerbate the recession even more.
P. The Government does not plan to undertake the fiscal reform until the recovery is settled.
R. But other countries that have chosen to lower taxes: Italy, Germany … Some of the increases that have been raised here are especially harmful for communities like ours, such as the tax increase on sugary drinks. Castilla y León produces 85% of the sugar and beet in Spain. When it comes to raising the registration tax and diesel, it is detrimental to a leading community in the automotive sector like Castilla y León. And the rural world, which needs that mobility, is particularly affected. Taxes are not always neutral from a territorial point of view.
P. Do you reject harmonization?
R. If the Government proposed a fiscal policy to reduce taxes, we would study it. My fear is that harmonization is used as a synonym for raising taxes. We are reluctant, because it ends up having a very negative effect on economic growth.
P. How much does Castilla y León aspire to receive from European funds?
R. We have set it at 5,000 million. It is a theoretical calculation that represents the participation of Castilla y León in the national context on the total of the funds that will be received, more than 70,000 million.
P. What are the main projects?
R. We have sent 454 projects for 6,800 million to the Government. Castilla y León has a high weight of the industrial sector. We export more than we import, we are well located and there is a climate of social peace. We also emphasize aspects of territorial equality. When we talk about digitization, that guarantees equality throughout the territory; When we talk about the green economy, it is not only the central core of large cities. With the pandemic there is an opportunity in the rural world to establish companies, telework. But it necessarily happens because that world has access to high-capacity internet on equal terms. Europe has the opportunity with these funds to guarantee equality throughout the European territory and for all people, wherever they reside. That the rural world also see Europe in close proximity.
P. These funds are used to get out of the crisis and make Europe more equal.
R. They must serve to get out of the crisis, and to come out more united. A stronger, more balanced, stronger Europe. Not just a Europe of big cities, but of the entire territory. These funds speak of digitization and sustainable economy, but also of social and territorial economic cohesion and equality.