Professor of Law with a long political career, Pilar Blanco-Morales (Llerena, Badajoz, 63 years old) is Vice President and Minister of Finance and Public Administration of the Junta de Extremadura (PSOE). In a videoconference interview, he demands that the reform of the autonomous financing system “not be approached as a struggle between communities.” Supports the harmonization of taxes: “Tax competition is always downward, so it is very necessary to establish that harmonized framework,” ditch. And he trusts that European funds will drive the “transformation” of the region’s productive system, which always appears among the furthest behind in economic statistics.
Question. They have approved the call for direct government aid. When will the money reach companies?
Answer. We have given a few days for the potential beneficiaries to know the conditions and raise their doubts. The application period opens on July 1. The money will arrive in the summer. The Junta de Extremadura has made all the necessary effort so that the procedure as of December 31 is concluded and placed for verification and inspection.
P. Do you worry about checking later?
R. No. We are used to the control of aid and subsidies. Does it involve difficulties? Do you need to contribute human and material resources? We know it, and we are willing to do it.
P. Extremadura is one of the communities with the worst economic indicators. Will European funds improve the situation?
R. The wealth indicators have, unfortunately, always been behind the rest of the communities. We are starting from a deficit position in every way. This means that Extremadura is a target region for the EU in cohesion policy and it has to be in recovery policy. We trust that these resources will improve the situation, but it is not just a question of resources. Extremadura has political stability, solid institutions, and has carried out an important task of administrative streamlining. It is what it is about to tackle the recovery, rather the transformation, in this case radical, of our productive system.
P. What bets do you have?
R. It is not a gamble. It is a political commitment on solid institutional foundations. Our projects are aligned with the objectives of the recovery and resilience mechanism, in the interests of ecological and digital transformation, without forgetting territorial cohesion. We continue to need physical infrastructures, without forgetting social cohesion. And of course guaranteeing gender equality. Extremadura has a battery of projects that cover the use of natural resources, the transformation of agribusiness, sustainable irrigation, the circular economy, digital administration, the transformation of the educational model with an important design of dual vocational training and a commitment to take advantage of the crisis not only for recovery, but also for transformation.
P. Are the lead times sufficient?
R. Are very short. And they must be, because if they were not, it would not be possible to recover in that asymmetric V that is expected.
P. What to do with the negative liquidations of the system that will arrive in 2022?
R. I believe that it must be approached first with the awareness that they respond to the economic crisis derived from the health crisis. Second, with the need to match them to the maintenance of public services and reactivation policies. I am convinced that we will find formulas that do not force cuts, although we understand that they must force us to make the necessary adjustments to guarantee sustainability.
P. Extremadura is one of the communities best treated by the financing system.
R. It is one of the communities that, due to its economic situation, and in compliance with the principle of solidarity established by the Constitution, needs more resources.
P. How do you have to reform the system?
R. We must start by talking about what model of the welfare state we want and how we sustain it. Second, what public revenue and resources are needed to address it. Finally, how this new model reaches the communities. The discourse on taxes, which is fundamental, cannot be made from a fierce liberalism that understands that paying taxes is a bad thing, when it is something necessary. Once that tax system is defined, we must define how we build that model on the basis of a vertebrate property, distinguishing between the taxes in which it is taxed based on the economic position of each person and in which everyone pays equally.
P. Has the debate gone out of focus?
R. Radically. Individuals and legal entities pay taxes, and those who benefit from public services are also individuals. The reform of the system cannot be approached as a struggle between communities. Because some of them get the money out of their ears and they can allow themselves to open embassies abroad to spread historical lies; Others we cannot because we have to attend to the needs of a population that historically has had lower pensions, lower salaries. We are radically against, as unconstitutional, the principle of ordinality. Solidarity mechanisms are necessary. We demand a model that provides additional funds, guarantees sufficiency, corrects differences and allows us to fulfill our obligations to citizens. And the cost of the services is essential to evaluate it, as well as to guarantee the leveling of all the services provided.
P. What to do with the status quo?
R. With the reform, all communities have to win. We have the obligation to configure a new status quo, and this is a sustainable welfare state, based on solidarity between those who have the most and those who have the least. In addition, there are some historical elements, such as the capital effect of Madrid or industrialization on a base of non-existent infrastructure in other territories, which are not reversible. Hopefully all communities enjoy them.
P. So more resources and a change in the cast?
R. This is how we defend it. Based on the real cost of services. In Extremadura the beneficiary population of public health services is 100%. There is not a sufficient level of income to use a complementary mechanism. I underline solidarity and that deep reflection on what tax system we have and what system we need. From that, what public services are we obliged to provide. To start with the distribution is to forget that we must first think about what welfare state we want.
P. There are communities that are reluctant to have their fiscal competences touched.
R. It is a deeply ideological polemic. Extremadura is an example of the responsible exercise of regulatory capacity to design new taxes. We understand that Spain is a vertebrate country, it is not the sum of 17 communities plus the State. I insist on a fiscal model that corrects inter-territorial economic imbalances. Also the participation of the provincial communities in the leveling mechanisms. I do not question the concert systems, they are constitutional, but rather their opacity and the need for these communities to participate in the design of this new system that, I reiterate, must begin with the design of the income that is required.
P. Supports tax harmonization.
R. Of course. For loyalty to citizens and for constitutional loyalty. It is deeply disloyal with the principles of the Constitution to translate the debate into taxes yes, taxes no. And it is radically false that lowering taxes contributes to improved tax collection and growth. It is proven that with simpler, more manageable taxes, more devoid of bonuses and exemptions and with a clear commitment against the black economy and fraud, collection is improved. That said, the debate is not on ups or downs, but on the configuration of an equitable, supportive tax system that distinguishes between the different situations in which people find themselves and, therefore, territories.
P. Why has tax competition between communities been exacerbated?
R. First for an ideological question. For the primacy of the liberal postulates. Second, because the Social Democrats, and I am self-critical, we have not been able to explain what taxes are for. Tax competition is always downward, which is why it is very necessary to establish that harmonized framework, where we are allowed to exercise those powers, but starting from a minimum and a maximum.