Joan Casals i Noguera (1925-1998). Former president of PIMEC1.
Avui. Written on 10th July, 1997. Economy. Capital gains.
Shocking things happen within public opinion: one of them is that, very often, the greatest contradictions are the most overlooked, and the other is that the most debatable matters fall into such a deep oblivion that people even lose sensitiveness towards any similar matter which may again appear.
A clear example of what we say is the present-day folly in Europe to be about to make a great monetary union among countries which show the greatest tax disunion. This folly becomes doubly strident in our country where, just a few days ago, in Spain we were quarrelling about a similar matter. That is the new financing model for the autonomous regions (with the assignment of 30% of IRPF – tax on income of persons) which only suggested a decentralization element which is far from causing a tax disunion within the country.
In spite of this, at the time all sorts of evil omens were broadcast against this slight slackening of the overblown Spanish tax centralisation, starting with the notion that this would mean shattering the solidarity among the Spanish peoples, to end with the idea that it would foster tax dumping among the autonomous regions.
Now, after this great commotion, in face of the great European tax disunion it appears that this disparity is found to be only natural. This, besides the rigid and irreversible monetary convergency which is being demanded of all of us from Maastricht.
It appears then that this disunion is a problem which may be left without worry for later and, therefore, it is not necessary to quarrell trying to start going a European tax union. In spite of this, with this attitude, don’t we risk to delay or to hinder the European political union? Wasn’t real political union the true reason and goal of all the steps taken by Europe since the Treaty of Rome 40 years ago? We mention this because we feel that a monetary union without a political union and therefore a tax union might risk starting a process of progressive separation among countries, specifically among the most competitive ones, from a point of view of industry, and those which now are less so. And this because the lower productivity of this second group will cause their prices (if there is a single, non devaluable currency), to be less and less competitive as years go by, and as a result they will lose markets and destroy jobs, thereby increasing inequalities among countries.
The fact is, however, that a true tax union would ask to a certain extent for a common cash, such as a federal budget, with reasonable reserves to cater not only for common services, but also for the funds to be transferred to the European states which may need a greater effort for community facilities and development… If you like, it would not be necessary to invent anything new, since this is what works already in the U.S.A. On the contrary, this operation would meet certainly with a great opposition and mistrust among the Europeans. Even if the prospect for Europe to spend many years in a strong and unified common market near a weak and disorderly common policy is not very enticing, unless we accept that political power becomes dependent on the economic power.
An article supplied by Jordi Griera, an honorary member of the Centre d’Estudis Joan Bardina.
Translation: Loto Perrella.
1 PIMEC: Petita i Mitjana Empresa de Catalunya (Small and medium enterprise of Catalonia).
Money and constitution.
Two interviews to Martin Armstrong. The Forecaster.