Interviews

Interview with Simon Tillyer, Director at Tenant Referencing Platform: Vouch

Interview with Simon Tillyer, Director at Tenant Referencing Platform: Vouch

February 10, 2021
Interview with Suzanne Wylde, Creator of Suzanne Wylde Coaching

Interview with Suzanne Wylde, Creator of Suzanne Wylde Coaching

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Interview with Tex Dworkin, Co-Founder of Raddle

Interview with Tex Dworkin, Co-Founder of Raddle

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Interview with Ram Krishnna Rao, CEO of MarketOrders

Interview with Ram Krishnna Rao, CEO of MarketOrders

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Interview with Priscila Martinez, Founder of The Brand Agency

Interview with Priscila Martinez, Founder of The Brand Agency

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Interview with Brianna Parks, Owner of Brianna Parks Photography

Interview with Brianna Parks, Owner of Brianna Parks Photography

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Interview with Stan Pavlovsky, CEO at Shutterstock

Interview with Stan Pavlovsky, CEO at Shutterstock

January 6, 2021
Interview with Austin Woodward, the CEO of Taxbit

Interview with Austin Woodward, the CEO of Taxbit

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    Communities Will Be Capable Of Spending Record 150 Billion in 2021

    by Harold Foster
    January 6, 2021
    in News
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    Communities Will Be Capable Of Spending Record 150 Billion in 2021
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    European funds will be added to the financing system and additional transfers

     

    The Government leaves the regional financing tap open despite the severe blow of the covid19 Between the payments on account and the positive settlement in 2018 the communities have received more money this year than ever

    In 2021 these items will decrease slightly but the State has committed to injecting additional resources to promote the recovery in addition to the income from the financing system the autonomies will have other extraordinary transfers from the central Administration

    In total the potential oxygen balloon will be 150000 million according to the Treasury

    The Government is committed to offering communities a bigger cushion than ever In 2021 the regions will be able to receive a whopping 140400 million euros between the income provided by the regional financing system and additional transfers to which the Treasury has committed

    Minister María Jesús Montero has also advanced that the autonomies will be able to access 10000 million of the European REACTEU fund designed to alleviate the socioeconomic impact of the pandemic despite the fact that the distribution criteria have not yet been decided

    The goal to secure the revenues that sustain services such as education and healthcare which depend on communities and to drive recovery from an unprecedented debacle

    But the time will inevitably come to account The autonomous financing system is based on a complex mechanism that must level the inequalities between regions

    The autonomies have each year income calculated on the estimated collection of various taxes those that have 100 ceded such as inheritance and donations and others shared which are 50 of the income tax collection 50 of VAT and 58 of special taxes

    Based on these resources which they receive in advance they build their budgets

     

    In other words if the economic forecasts are positive the communities have more oxygen

    Two years later comes the adjustment If they have received more than expected the excess financing will be subtracted and vice versa But the pandemic has partially disrupted this scheme

    In 2020 with a drop in GDP that the Government forecasts of 112 the autonomous regions will continue to receive an unprecedented flow of money as if there were no crisis

    The Executive calculated the amount of payments on account at the beginning of the year before the devastating impact of the virus materialized on an estimated growth of 16

    And it has decided not to correct it in the face of the mammoth increase in spending and the collapse of income caused by the health crisis

    Until July of this year the collection for the assigned taxes has sunk more than 25 and 12 from state taxes Even so between the payments on account and the positive settlement of 2018 the regions will receive this year about 116000 million

    In full alarm the Government also announced an extra fund of 16000 million If another 2211 million in additional spending is taken into account due to this years deficit target 02 of GDP the figure available for 2020 already reaches a record of almost 134000 million which will be set again next year be beaten with the close to 150000 million

    Payments on account are normally calculated trying to anticipate what will be collected in the year and this will not be the case in 2020 or 2021 says Ángel de la Fuente researcher at the CSIC and director of Fedea

    artificially high incomes as happened in the previous crisis with the idea that this way the communities will be able to act better But it is not realistic he warns

    In 2021 all the autonomies will receive slightly less from the financing system Catalonia Andalusia and Madrid will continue to be the ones that will get the most money in absolute terms as they are the most populated and richest

    Where the flow will decrease the most will be in Asturias and Aragón But the Treasury has promised to juggle both the spending and revenue side to increase total resources by more than 10

    One of the announced measures comes from the deficit side for which the regions will have in practice an open bar

    After suspending fiscal rules for this year and next the Treasury has set a deficit reference rate for the communities of 22 of GDP which is not mandatory compared to 02 in 2020 In total some 26000 million more spending by 2021

    Half of this gap will be assumed by the State through an extraordinary transfer the remaining 11 corresponds to an additional expense that the communities may assume by financing themselves in the markets or through extraordinary liquidity mechanisms

    The shock is going to be assumed by the State I think it is dangerous because it gives the impression that it is all free and the incentives to adjust are small adds De la Fuente
    In the current situation we have no choice but to accumulate debt but we must be aware that this is a loan and that it must be repaid he closes

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    Harold Foster

    Harold Foster

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