The process towards an Independent State and the first months of the Catalan State

The first months management

July 2012

2

Generate social support

Simultaneously, it is necessary to quickly and efficiently manage the operation mechanisms of the new state in the first months

Political Sphere

Operational Sphere (State's

structure)

Define necessary functions

Appoint, supervise and coordinate key persons and work teams

Develop information systems

Communicate the process internationally, establish alliances with key countries and agree with them terms for recognition

Sovereignty Act

Declaration of Independence

International recognition of the Catalan State

First months as an independent State

Define key transition processes

3

These mechanisms structure in different spheres, but the most important one is the payment of public employees salaries, pensions and unemployment benefits

}  Catalonia’s sovereignty restitution Decree }  Bestow the President wide-ranging powers related to national sovereignty

during the constitution process, under Parliament’s control }  Decree to directly and temporarily apply the Spanish laws until they are

abolished or substituted by Catalan laws }  Tax management decree

}  Collect all taxes (Catalan Treasury)

}  Grant the provision of social services to population

}  Grant security on streets }  Grant control in key places

}  Grant oil, gas, water, electricity, Internet and communications supply

Legal

Fiscal

Social

Security

Energy and communications

Spheres }  Grant payment to public employees, unemployed and pensioners }  Grant payment to Generalitat’s suppliers Economic

Generate social support Political Sphere Communicate the process internationally,

establish alliances with key countries and agree with them terms for recognition

Sovereignty Act

Declaration of Independence

International recognition of the Catalan State

First months as an independent State

4

If the new Catalan state was immediately able to collect all taxes, it would have 6,000 million € per year to reinvest in the country

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8 6 Taxes paid by

Catalonia to the State

Quotes paid to Social Security by Catalonia

Tax collection capacity

Generalitat's non-financial

expenses

Unemployment benefits and

pensions

Surplus without financial interests

Generalitat's debt interests

Surplus after interests

Yearly public income and expenses of the new Catalan State (thousands of million €)

5

One of the key aspects is to collect as many taxes as possible during the first months of the Catalan State }  To that purpose, it will be immediately approved, on the same day of the Declaration of

Independence, the Tax Management Decree that will legislate the mechanisms of the Catalan Treasury during the first months of the Catalan State

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8 6 Taxes paid by

Catalonia to the State

Quotes paid to Social Security by Catalonia

Tax collection capacity

Generalitat's non-financial

expenses

Unemployment benefits and

pensions

Surplus without financial interests

Generalitat's debt interests

Surplus after interests

Yearly public income and expenses of the new Catalan State (thousands of million €)

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The Tax Management Decree will include a set of mechanisms to quickly obtain the taxpayers data

}  Immediate assumption of the Spanish Treasury delegations located at Catalonia, including all existing documentation in those offices

}  Assumption of all Treasury officials as Generalitat’s government employees }  Establish personal bonuses for those treasury officials who collaborate in providing

the files and documentation from the old Spanish Treasury

Spanish Tax Agency

}  Obtaining taxes and tax return databases from Regional Councils Regional Councils

}  Require companies and self-employed individuals to register in a Generalitat’s website, with their CIF (Fiscal Id Code), CNAE (Activity Code), etc.

}  Requirement to all companies based in Catalonia to submit an (electronic) copy of their tax liquidations within the last 3-5 years.

}  Establish bonuses for all those companies that submit these documents within the first 20 days, and surcharges for those not doing so without just cause

Banks

Companies, self-employed and other

organizations

}  Require the banks to send digital data of tax liquidations from all individuals and organizations, defining sanctions and, if necessary, seizure orders

Other ways to obtain Treasury files are: Ø  Formally request to Madrid the treasury files in Catalonia, during a transitional period Ø  Hire hackers

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Likewise, the decree will set the obligation to pay the taxes to the Catalan Treasury

}  Requirement to all companies based in Catalonia to pay their taxes to the Catalan Treasury

}  Establish sanctions for those companies not doing so without just cause

}  Enable the Mossos d'Esquadra force to inspect all those companies that have not submitted the above mentioned statements, after a decree is issued at the BOG (Generalitat’s Official Bulletin)

}  However, There will be foreign multinational corporations that won’t pay their taxes to Catalonia until their respective governments recognize the Catalan State §  This is one of the reasons for the need to accelerate international

recognition of the Catalan State

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In the beginning, while it cannot collect all taxes, it will be necessary to resort to other sources of financing

}  Loans against collateral of nationalized State’s assets: §  Ports §  Radio electric spectrum §  Real state assets §  Railway network §  Airports §  ...

}  Issuance of debt to surface hidden assets

}  Loans from Catalan banks and others who want facilities to settle on the Catalan State

}  Loans from “friend” governments with strategic interests

}  Issuance of Catalan debt

}  Credit in exchange for compensation §  For example: Barcelona’s port

}  Issuance of an alternative currency as a contingency

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These financing sources should allow to face the payments during the first months of the new Catalan State

}  During the first months it will be necessary to face 5.000 million € expenses monthly: §  Government employees §  Pensioners §  Unemployed §  Generalitat’s expenditure

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8 6Impostos

pagats perCatalunya a l'Estat

Cotitzacionsa la Seguritat

Social pagadesper Catalunya

Capacitat recaptatòria

Despeses nofinanceres dela Generalitat

Subsidis d'aturi pensions

Superàvitsense

interessosfinancers

Interessos deldeute de la Generalitat

Superàvitdesprés

d'interessos

Percentage of tax income and social security contributions collected by the

Government during the first months

Monthly ammount to be covered with other

financing sources

25% 3.300 million €

50% 2.000 million €

75% 700 million €

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It will also be necessary to protect the Catalan companies suffering a trade boycott during the first months of the Catalan State }  The study by economists Guinjoan and Cuadras, based on interregional trade balances of

2005, mark a boycott maximum equivalent to 4% of GDP }  Trade balances in 2005 showed a Catalan trade surplus against Spain of 10,3% of GDP

(20.000 MM€), while the fiscal deficit was 9,8%

}  The latest data on trade balances released by the state show a 4500 MM€ surplus. That means that in the worst case scenario, according to the study, the impact of a boycott would be 1% of GDP.

}  However, there will be companies suffering a trade boycott and it will be necessary to protect them from the beginning: §  Encouraging the counter boycott from Catalan people §  Helping companies suffering boycott to refocus their business with State’s aid

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The proclamation of the Catalan state must come together with some early positive actions for citizens

}  Tax cuts §  Announce tax cuts for all companies, specially Small and Middle sized companies §  Reduce Income Taxes for all brackets, in order to equal it to average European levels §  Study the reduction of VAT specially on all essential goods and those affecting the mid-

low section of the population §  Eliminate the healthcare cent tax on oil §  Reduce social quotes

}  Announce a study to increase pensions }  Law of tax transfers to city councils to grant basic public services }  Announce a study to rescue tolls, maintaining normal prices for heavy traffic and

reduced prices for cars, only to cover for maintenance and a “normal” profit for concessionaires

All this will be possible when we collect all taxes

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The proclamation of the Catalan state must come together with some early positive actions for citizens }  Immediate promotion of ACC10 and policies for internationalization and innovation

}  Act to turn the ICF into the Catalan Public Bank, with immediate credit

}  Risk guarantee Law for companies

}  Dation in Payment Law

}  Get back the Saving Banks Law

All this will be possible when we collect all taxes

Empresaris  per  l’Estat  propi  

www.ccncat.cat  info@ccncat.cat    

Only  by  being  an  independent  state  will  Catalonia  be  economically  viable