Santiago Álvarez, the Vice Rector of the Universidad de Oviedo, spoke on Wednesday, 13 March 2013, as part of the cycle of continuing education lectures organized by the Faculty of Legal and Political Sciences. Álvarez's lecture focused on the article he wrote with Prof. Juan José Rubio, "El mito del expolio fiscal" (The Myth of Fiscal Plundering).
In his lecture, Álvarez explained, “It doesn't make sense to assess all the actions of the central government in terms of how they affect the regions”. In his opinion, “It's a broader problem that should mainly be addressed within the scope of individuals”.
Álvarez pointed out, “Income is what determines the taxpayers' tax burden, not where they live. For example, if a resident of Catalonia has to pay more income tax than someone who lives in Aragon or La Rioja who earns the same salary, that's because the government of that autonomous community applies a higher tax rate on the segment of the tax that corresponds to the autonomous community. This doesn't affect the fiscal balance because those taxes go to the autonomous community. In terms of the central government's share of those taxes, people in all three regions pay the same.”
Álvarez continued, “The proposal of the fiscal compact is a request to turn Catalonia's current system into a concerted taxation system to give Catalonia the same treatment as the Basque Country and Navarra. But that option”, according to Álvarez, “cannot be implemented because there are richer autonomous communities in the financing system and, if they leave, the other communities will not have sufficient financial resources”. Álvarez went on to say, “People are the ones who pay taxes and the system is set up so that the communities that pay less receive more and the ones that pay much more receive less”.
Finally, Álvarez finished his lecture by saying, "Extending this kind of concerted taxation system to other regions would result in overly high economic and social costs that would bankrupt the system. What's more, it would violate the principle of equality and solidarity between regions, as stipulated in the Spanish Constitution". Álvarez proposed an alternative, “The system could be simplified to guarantee the relative position of each autonomous community in per capital financing and the features that regulate the level of horizontal and vertical alignment could be reviewed. The cost factors acknowledged by the system could also be reviewed.”
