Wednesday, January 22, 2014

A brief explanation on the Catalan Treasury and how to get it started.



The idea of building a new state necessarily involves having a treasury. This is something everybody understands.

On top of that, we are not aware yet of the enormous difficulties to implement the measures to achieve this objective. Those difficulties are technical, operational, budgetary, and let’s not forget, the difficulties arising from having to work in a hostile legal environment that will try to put all possible obstacles to slow down the process and delay the creation of the new state.

The Catalan society has already shown many times its determination to move towards the creation of a new state and now is the time to speed up the creation of its own Treasury.

The Spanish ‘Agencia Estatal de la Administración Tributaria’ (the Spanish AEAT is the equivalent to the Inland Revenue) has undertaken in recent years a great effort to manage central taxes electronically. Employers almost entirely file their VAT and Society Tax declarations electronically. Individuals also do it through the 'Program PADRE' when preparing their tax returns.

In practice, we should take advantage of information that is already there in order to manage it properly.


The electronic tax filing uses a set of predetermined parameters that allow to feed the databases available to the AEAT. These records are neither secret nor encrypted. In fact, they are completely public and can be found on the Inland Revenue's own website:


http://www.agenciatributaria.es/AEAT.internet/Inicio_es_ES/_Configuracion_/_top_/Ayuda/Disenos_de_registro/Disenos_de_registro.shtml


A small team of computer technicians would have no trouble creating a database capable of absorbing those files. In fact, the files have already been pre-validated by the Inland Revenue. If the taxpayer has submitted their files and the Inland Revenue has already accepted them, then, those files could be presented to the ATC (Taxation Agency of Catalonia) with just an additional easy procedure.

What I propose is to ask the taxpayers whether they wish to send these files periodically to the ATC. This way, the ATC could start getting real information about the current Catalan taxpayers and start building a Treasury on its own.


In case that neither the ATC nor the Government wanted to carry on this proposal for political reasons, the ANC (Catalan National Assembly) could collect this data and periodically transfer it to the ATC​.

The information regarding taxes is sensitive and in some cases subject to the Data Protection Act. I do not think the ANC should be able to access to it, but I believe in the possibility that the ANC may have a role as a mediator in this process.


To explain this idea in simple words, the taxpayers would hand the tax information in a sealed envelope to the ANC, who would transfer it to the ATC without making any use of it.

It is is perfectly possible to create this mechanism from the technical point of view. The encrypted files are sent to the ANC, and a decryption key remains deposited by a notary who can send it to the ATC on request. The ANC is therefore just a messenger that periodically sends the information to the ATC with the label ‘to be opened by recipient.’ How things work out after that is up to the ATC.

I think this idea could really take on in Catalonia, and I think so because I have experienced so in my professional career.


I've been asking many taxpayers, both businesses and individuals if they would like to submit their taxes directly to the Catalan tax agency. Many have fears or are reluctant to pay to the ATC (fines, penalties, etc ...) but had no problem in saying that, if they could, they would file a copy of their taxes to the Government of Catalonia with pleasure.

In fact, this idea is based on the following principle:


If communicate with Spain, why wouldn’t you communicate with Catalonia?


Or if you prefer:


If Spain knows about it, why should Catalonia not?


This will let individuals and business, those who do not have to pay taxes because they do not make enough money, and those who don’t dare paying their taxes state taxes to the ATC, joining into the building process of a Treasury without breaking the law nor facing fines and penalties.


In the end it will be our government’s decision what to do with the information.


I believe with this proposal the ANC would make a major push for the creation of our own Treasury.

Albert Sagués.

Economist

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