The Treasury today communicates to the CCAA the new deficit path in the CPFF, marked by complaints about VAT



The spokeswoman of the Government and Minister of Finance, María Jesús Montero, will transfer this Friday to the autonomous communities the new path with the objectives of deficit and public debt at the meeting of the Fiscal and Financial Policy Council (CPFF), which does not meet since 2018, as a preliminary step to the preparatory work of the General State Budgets (PGE) of 2020. The meeting will be marked by the complaints and complaints of the regions by the regional VAT of 2017.

Specifically, the Ministry of Economy and Finance of the Autonomous Communities have been summoned to the CPFF meeting for 4:30 pm on Friday at the headquarters of the Ministry of Finance in Madrid, where they will be presented with the new path of stability with the deficit and public debt objectives and the fiscal effort of each administration for the years 2020, 2021 and 2022.

Also, Montero explained last Tuesday that the meeting will be informed of said "journey" planned by the Government to undertake the preparatory work for the presentation of the General State Budget (PGE) of 2020, something that sees "urgent" for Spain when the 2018 accounts remain extended.

The last meeting of the Fiscal Policy Council took place electronically on August 22, 2018, and in person on July 31 of that year. As it happened in the last meeting, the Vice President of the Generalitat, Pere Aragonès, will not attend the CPFF, despite Montero's requests. The Secretary of Economy, Natàlia Mas, will go in his place, since he does not have the rank of director, he will not have a voice or vote in the meeting.

On the agenda is the update of the official path approved by the Government of Mariano Rajoy in 2018, which set a target for the State as a whole of 0.5% of GDP by 2020 and budgetary stability already in 2021, practically unattainable goals, since the Pedro Sánchez Executive actually predicts a deficit of 1.7% this year and 0.4% in 2021, postponing budget stability for the year 2022.

The regional objective initially planned by the Government of Sánchez is a deficit of one tenth of GDP this year, and that the regions achieve budgetary stability next year.

The Government is in constant dialogue with Brussels regarding the forecasts and the new path, pending the budgetary plan on which the European Commission will decide in due course. After removing Spain from the excessive deficit procedure, Brussels demanded from the country a structural adjustment of 0.65% of GDP, equivalent to about 8,000 million euros, for the past year and the current one. Spanish accounts are currently controlled in the so-called 'preventive' arm, in which, instead of the nominal deficit, structural efforts are taken into account. That is, those that are carried out without taking into account the contribution of the economic cycle.

In any case, the Government is guaranteed the approval of the new path at least in the CPFF, since the Ministry of Finance has 50% of the votes in this body, compared to the other half corresponding to the autonomies, so that the majority will achieve with a single community voting in favor.

After the approval of the path in the CPFF this Friday, the Government will subsequently approve in the Council of Ministers the limit of non-financial expenditure, known as the 'expenditure ceiling', to later present it along the path with the new deficit targets and debt of the administrations to the Congress of Deputies and the Senate, where you must get enough support for your approval.

If it finally achieves support for the 'expenditure ceiling' and the deficit and debt path, the Executive will present the General State Budget (PGE) project for 2020.

With regard to the path of stability, several communities have explained that they are not going to claim a greater margin of expenditure but that they are paid what they understand to be owed, both of VAT and of the financing system. Others, however, do want more flexibility, such as Extremadura, which insists that it does not face both a problem of spending and income.

Extremadura Minister of Finance, Pilar Blanco-Morales, has argued that the deficit objective is "more and better sequenced in time" so that Extremadura can "meet" and do it "without cuts."

On its side, the call of the National Commission of Local Administration (CNAL) to transfer the fiscal objectives for the local administration to the municipalities and the presidents of deputies is pending.

AUTONOMIC VAT

The regional councilors come to the meeting of the CPFF willing to demand the payment of the 2017 VAT settlement to the minister. Montero has insisted that the matter is settled, but the claim is almost unanimous: the communities of the PP but also a good part of those of the PSOE threaten to go to court to collect. Madrid did it last year and now Galicia, Murcia and Andalusia have followed in their footsteps.

Among the socialists, the first to agree on a resource has been Castilla-La Mancha, but Aragon, Extremadura and the Balearic Islands do not rule out doing so, waiting for a response from the Treasury that could arrive this Friday. It is what the Aragonese president, Javier Lambán, explained that they will make a decision if they hear the definitive 'no' of María Jesús Montero.

The same has been said by the Junta de Extremadura, which in the CPFF will "formally" claim the liquidation of VAT and, depending on the response, will opt "by the appropriate legal means," said Blanco-Morales.

Although the Government argues that it could not approve the "solution" when it corresponded, in 2019, as a result of the rejection of public accounts last year that collected the instrument for the payment of VAT, the Minister of Finance, María Jesús Montero, said the Wednesday I was willing to study "palliative measures" on the settlement of the tax.

The issue of autonomous VAT refers to 2017, when the then Minister of Finance of the PP Government, Cristóbal Montoro, carried out a regulatory change that forced the company to report VAT to large companies in almost real time and He allowed the tribute to be paid on the 30th of each month instead of the 20th as it had been done.

The regulatory change caused the collection of VAT that was entered in December 2017 to be transferred in cash terms to January of the following year, 2018. In this way, the liquidation of the 2017 exercise, which was carried out at two years, in 2019 , it was only eleven months, thus missing the payment of a monthly payment.

AUTONOMIC FINANCING, ALSO PENDING

The position of other communities is that not only does this VAT have to be compensated and that it is time to address the reform of regional financing. The position of the Valencian Community is clear in this regard and wants to claim once more before the Fiscal Policy Council that the change in the law is already addressed.

The update of the financing system has been pending since 2014. It has to be carried out by negotiation with the 15 communities of the common system, including Catalonia, which for the moment will not send an advisor to the meeting this Friday.

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