Arcadi Spain, Minister of Finance for less than a year, has had to work on consensus with Compromís and Unides Podem to move forward with the 2023 Budget, the tax reform (unanimously approved in the Corts) and endure indirect criticism of the indifference with which the Government of Pedro Sánchez assumes the Valencian underfinancing.
With the bearing of a British university professor and excessively prudent in his answers, Spain agrees in this interview to value the kitchen of a ministry that is now facing quite a few storms due to the decision to subsidize inheritance tax.
Is an administration with more than 50,000 million euros of debt sustainable?
The public administration has to have the resources to be able to function. There are administrations and countries with much larger volumes of debt and they are sustainable as long as they have adequate financing to support that economic growth and bear the payment of that debt. However, it is true that either a solution is sought to the large volume of debt that the Valencian Community has or, in the medium term, in ours and other autonomies the functioning of self-government and the welfare state will be called into question.
The problem is that there has not been, on the part of the Spanish Government, any gesture to seek a solution to debts as important as that of the Valencian Community.
That is true, but we have been financed and given unprecedented liquidity that has allowed us, despite having that volume of debt, to increase spending on fundamental public services. At this time, we have been able to converge on the national average in spending on education, health and social policies.
But this financing is done via FLA, which means increasing the Valencian debt even more.
Absolutely agree. We are living and our welfare state is maintained, growing and advancing in rights thanks to this extraordinary financing. What we want from the Generalitat Valenciana is a stabilization; a change in the financing model that, in the end, what it is about is achieving equality among Spaniards. This reform must be accompanied, at the same time, by a restructuring, by removing part of the debt. It makes no sense to change the distribution model if the starting situation of the autonomous communities is not equalized and that goes through a haircut as has happened in history in other countries.
What happens to the Valencian debt with inflation? What effects will it have?
As it is linked to interest rates, in next year's budgets one of the items that grows the most is financial expenses. The interest that we have to pay grows and that also hinders us when it comes to having those resources available for other types of policies. What is saving us is that we have someone, the Government of Spain, that finances our debt.
There are not a few economic theorists who think that, to the extent that the Spanish Government is controlling some autonomies through the FLA, we are witnessing a significant decline in financial autonomy, which in turn implies a decline in political autonomy. , do you agree with that?
I agree that we must move towards models such as the German one. It is not possible to maintain over time the fact that the financing of the autonomous communities comes from extraordinary funds. There are decisions on the distribution of resources between the different levels of administration that should not depend on the government or the minister on duty, but rather have to be made in a more automatic and regulated way, as happens in Germany. Whether there is an FLA or not, sooner or later, is a decision made by the Government of Spain and I believe that it should be regulated based on needs and not based on negotiations that each autonomy has with the executive on duty.
But the question was whether the FLA limits autonomy.
It could limit it, but at this time, and we have demonstrated it with facts, the Generalitat Valenciana has used its political autonomy and has managed the resources that came from the Government of Spain with autonomy.
The financing reform is complicated, but how is it possible that the Government does not lend itself to a transitional fund to help the worst-financed autonomies until a definitive agreement is reached?
It is true that the Government of Spain has the maximum responsibility in the change of model, but it is not the only one responsible, so are the rest of the parties, especially the PP, which is in a blocking position. Also the regional presidents. After all the technical analysis that there has been - there is a lot of consensus on which communities are poorly financed and that the problem has to be solved - now there is a problem of empathy. If we ask citizens if they agree that the money that all Spaniards pay is distributed fairly, they will say yes. If we consider it as a struggle between political powers, with short-term maneuvers between governments to get votes, the problem becomes more complicated and out of focus. The solution involves recovering the capacity for dialogue and the empathy of many autonomous communities that have adequate financing and that, with the current expired model, feel comfortable and, therefore, do not want to take steps towards its reform.
Is there a certain lack of solidarity on the part of some autonomies?
I believe that there is a certain lack of solidarity of some autonomies, it is evident. In addition, there is a great contamination by external elements on a debate that should not be so contaminated. Other countries such as Germany, which also have landers with different economic growth, are making progress in regularly updating the distribution model of federal funds. The problem is that the debate on regional financing is not that it has become politicized, it is that it has become partisan.
And since the reform does not arrive, we repeat, year after year, a fictitious item in the budgets of the Generalitat, to what extent is this viable?
What we have to do is exercise our responsibilities, guarantee Valencians resources to be able to sustain and improve the welfare state, gradually correcting the gap that we had between what we spent in 2015 on fundamental public services and what we spend now . I want to thank Minister María Jesús Montero for her sensitivity, especially with the Valencian Community, a sensitivity that has allowed us to finance the increase in spending in recent years.
Although we have an expansive budget, we do see that there are Ministries and areas such as Health that need more resources.
Healthcare in this country needs a global financial rethink. The health system, especially after the pandemic, is going through a difficult time and will need additional resources. Therefore, it will be necessary to see, as a country, how we want to distribute the necessary resources to continue advancing and improving our National Health System.
They have managed to unanimously approve a tax reform. Several reports confirm that the Valencian Community is in the top ranking of the regions that put the most pressure on high incomes. Are you afraid that this pressure on high net worth individuals could drive them away from the Valencian Community?
The facts confirm the opposite. In the Valencian Community there are large estates, many linked to large family businesses, which continue and have never said that they are going to go to any other autonomy. They are people who believe in themselves and who know that paying taxes on their land is positive. In addition, we have a constant trickle of multinational companies that do not have any personal or family ties, that are familiar with our tax system and that come to settle in the Valencian Community. This model, more than scaring away investments, is attracting different companies and the facts support it.
It is not contradictory to assume fiscal autonomy and at the same time criticize Madrid for applying tax cuts.
The tax reductions applied by other autonomies have nothing to do with what we have done in the Valencian Community. The discourse, for example, of Andalusia to abolish the Wealth Tax was to attract large estates and the discourse of Madrid was in the same vein: I lower taxes on the rich so that they come richer. Our reform has been made to help those families who are having the worst time to minimize the impact of the price rise. Our objective has not been to attract large estates, but to make life easier for families, the middle and working classes; More than fiscal policy, what we have done has been a social policy using the fiscal mechanisms that the Generalitat Valenciana has.
The Consell has been very critical and Madrid has even been accused of tax dumping and, at the same time, President Puig has applied his own autonomy to carry out his tax reform. Isn't there a contraction?
I don't see any contradiction because what we are criticizing when we criticize Madrid, which is overfinanced, is not that they use their fiscal autonomy. What we criticize is lowering taxes on the highest incomes, what we are censoring is the use of the instrument.
An IVIE report indicates that this fiscal policy applied by Madrid allows it to absorb all kinds of resources from other autonomies. Do you agree with this criterion?
What is true is that in Madrid there is a capital effect. It is true that Madrid can afford certain things that other autonomies cannot afford, but it can afford it because there is an unfair model of autonomic financing and because there is also a different ideological perspective. It is true that, as a country, we have to reflect on what Madrid means and the role it should play in Spain as a whole. No one questions its capital status, its potential, its dynamism. No one questions it because Madrid is doing well for all of us, but it is that the Valencian Community or Andalusia is doing well for all of us. What we have to think about is that Spain is much more than Madrid.
What is not clear to us then is what taxes we must harmonize.
In the debate on tax harmonization, what the experts say is that the decisions made by companies or investments to go to one territory or another should not be marked solely by the tax side. Other elements must have an influence, such as the good management of their universities or their health system... Consensus must be reached on some basic elements of our tax system and then each autonomous community exercises its financial capacity. But being aware that if you eliminate the Wealth Tax, you will have less income and less possibilities of spending.
Do you feel comfortable having to seek the support of the Popular Party or Ciudadanos to subsidize the Inheritance Tax for family businesses that have a turnover of more than 10 million euros? Is that measure a progressive fiscal policy?
It is an amendment presented by the Socialist Group that the parliamentary groups will debate and vote on as they deem appropriate. I believe that there is a defining and important element in the Valencian Community and that is that, luckily, we have many family businesses. I always say that companies that have surnames tend to relocate less, they tend to stay here and pay their taxes. I consider it positive that Valencian companies of any size have facilities to be able to inherit and that a foreign investment fund does not come to buy them as happens in other territories. In addition, the amendment will also encourage the growth of our companies, we have an ecosystem of small and medium-sized companies. It must be taken into account that the largest are the ones that innovate the most, where there is greater union strength and their workers are better represented and, in addition, they tend to be the most competitive. What is requested is a very small variation since there is already a bonus of 95%; this is not a big hole in the accounts. But hey, each group will have to do their own analysis and then make a decision.
In Parliament, the discrepancies of left-wing groups around renewables have been displayed. Is the Valencian Community going to be able to advance and expedite the implementation of projects in order to attract European funds?
The Generalitat is going to do everything possible and impossible to make this happen. It is a social demand not only to advance on the issue of renewables, but also a necessity to fight against climate change. We have a historic opportunity to have energy sovereignty and even to be able to export energy. The wind and the sun are, we could say, like the oil of a few years ago. Due to our geographical position, if we do it well, we can be a power in terms of renewable energy.
This week the employers launched a very harsh statement and said that a part of the Valencian Administration, for political reasons, was blocking the approval of projects. What's going on?
It is true that the process is complex. An effort has been made and the Generalitat has already approved a decree law to expedite all these procedures, but we have to continue making efforts to meet the milestones that we have set for ourselves. I have no doubt that all the ministries are going to make all the necessary efforts to meet these milestones in a timely manner.
It seems that Puig will repeat as head of Castelló's list. Do you see yourself leading the candidacy for Valencia?
The president is the one who has to decide not only where he leads, but who he wants to lead each of the candidacies and their composition. I am absolutely satisfied with the confidence that the president has in me and with having appointed me, first, Minister of Territorial Policy and, now, of the Treasury.
You have been described on numerous occasions as Puig's dolphin. Are you willing to assume even more prominence in the PSPV in the future?
My only priority is to do my job well as Minister of Finance. I think we have Ximo Puig for many years and anyone who knows him knows it well.
It is true that if Ximo Puig has become a great political asset for the PSOE and a great benchmark for the PSPV, could that make it difficult for other figures in the party to rise?
We are lucky to have a president who is endorsed by his management, who has managed to put the Valencian Community and his way of seeing Spain and the Valencian Community on Spain's political agenda. One of the values that Puig has, who has been and will be a transversal president, who has perfectly understood the mandate that reaching the Presidency of the Generalitat entails, which is none other than to govern for everyone: for those who have voted for him and for those who No. Something that does not happen in other autonomies.
Enric Juliana told the president of the Generalitat that he seemed like the last remaining federalist in Spain. After listening to you, could we put you in the Federalists' package?
Perhaps people do not understand the word federalist very well because it is contaminated by other meanings. It seems as if it was loaded with nationalism or inefficiency. I consider myself a federalist and autonomist, but not for nothing, but because I believe that I believe in equality and I also believe in singularity. Many of the most advanced countries in the world such as Germany, the United States, Australia or Canada are countries of a Federal conception and they work very well. I think that an autonomous model is better than a centralized model, and even more so in a country with different cultures and different languages like this one. And I have to tell you one thing: I think it is clear that if autonomy had not existed, if the Generalitat Valenciana had not existed, Volkswagen would not have come to Sagunto.
