2023-09-24 03:59:28
Guillermo Peláez Álvarez (Oviedo, 1984) had already practically got his life back on track in Madrid – with a position as Treasury inspector, his wife and his newborn son – when he received the call from Adrián Barbón to join the new Asturian Government as Minister of the Treasury and European Funds. Raised in Lugo (where his father was a prison officer) and coming from a family with a republican and socialist tradition (he has been a militant since he was 16 and even ran in the primaries for the Mayor of Oviedo), Peláez is the youngest member of the Regional executive.
–What will the reform of the Principality’s Public Finance Law consist of?
–It will consist of modernizing the functioning of the Principality’s financial administration and improving budget execution processes. I also believe that the functions of Intervention and operational audit can be further developed: that is, not only a control of legality and accounting, but also effectiveness and efficiency. And as for day-to-day procedures, I believe that the regulation can be updated, in the sense of defining which body is most suitable for one or another function. The current law, from 1998, has worked very well, but for the budget and powers that we currently manage, it has become obsolete. Many times we refer to State regulations and adapt to them, and that generates legal uncertainty and a delay in time. Therefore, a law is necessary so that there are no doubts and that we know at all times what to do.
–Does this reform involve increasing the workforce?
–In the Intervention it is necessary to incorporate more qualified people, since the processing of European funds has meant extra stress, and these funds also require a lot of agility to meet the planned milestones. This is added to the aging of the workforce, which is common to all public administrations.
–Is the fight against bureaucracy, which Barbón has talked so much about these years, compatible with the increase in civil servants?
–Without a doubt. In fact, it is essential. This Public Finance law is a key element in this fight against bureaucracy. Streamlining the processing of the Budget and guaranteeing procedural controls is fighting against bureaucracy. It is worth remembering that public employees are not bad or good in and of themselves; They are bad or good if they fulfill the function for which they are intended. If we increase the staff of this Ministry, we will be able to manage public resources more efficiently.
The proportion between services, social investment and officials of the Principality is below that of large companies
–A record level of public employees has been reached: more than 63,000, of which 44,000 are from the autonomous Administration…
–The regional administrations are fundamentally dedicated to managing education and health. But also firefighters, forest guards, public residences… What is pure and simple administration is 2,000 people to manage a Budget of 6,000 million euros. Do you really believe that a private company has that ratio? The proportion between services, social investment and officials who manage the Administration is far below the functioning of large companies. Therefore, we do need people at the heart of management. We do a lot with very little.
–Will the 2024 Budget be larger than this year’s?
–We are going to have more income as a consequence of economic growth, and we are simply going to balance the Budget. We do not have the legal capacity to make a Budget with a deficit, since, according to the budgetary stability rules of the central Government, the criterion of “zero deficit” will once again prevail, that is, equalizing expenses and income. It is true that in the area of the regional departments of Finance there is a rumor that in the coming years we may be required to have a surplus in public accounts.
–Asturias is the seventh best financed community. If the regional financing system is finally reformed, could the region be harmed?
-In no case. The system has the incremental clause assured. This system must be reformed because in recent years the costs of the public services provided by regional governments have increased. What we ask of the State is to continue decentralizing income (either through powers or by transferring money to us) because the weight of spending policies is greater than when the system was designed.
–But won’t asymmetries occur if other communities demand better treatment?
–No, because what it is about is that we obtain the necessary income so that we can exercise our powers on an equal footing with the rest of Spaniards. The fact that there are other communities that, after the process of negotiating the system, see their income increase in a greater proportion than Asturias, should be irrelevant to us. And we must have that scenario, but that does not mean that Asturias is left worse off.
–Isn’t it a comparative grievance?
–What does the comparative grievance matter, what it is about is that Asturias obtains the necessary resources to provide its services. Perhaps there are other autonomous communities that currently have a greater need to increase their income than we do. I can’t judge the others. I insist, we are going to win from this negotiation, there is no possibility of losing.
–Do you consider the Inheritance and Donation tax fair?
–There are few fairer taxes. Taxing inheritances was a nuclear element of the liberal revolutions on which the current States are based, because the opposite was noble privilege. The revolutionaries understood that if there was not a distribution of the deck in each generation, this directly threatened freedom of opportunity and meritocracy. That is to say, this tax is at the heart of classical liberalism, because the opposite is to consolidate a rent-seeking and immobile financial aristocracy.
–But hasn’t taxes already been paid for the creation of that heritage that is inherited?
–The person who has paid taxes is another person. We live in a society of free citizens, not family castes. When I inherit, my assets increase. And I haven’t paid for it. Therefore, it is a taxable capacity that is directly evident and that is susceptible to being taxed. It’s something very basic.
–The tax, however, can be increased or reduced, subsidized more or less…
–In Spain there are three models of this tax. The Asturian, who through exempt minimums, means that among direct relatives the tax is only paid by 0.69% of the declarations. We can affirm that the Inheritance tax between direct relatives has disappeared in Asturias. The second model is that of Madrid, where there are no exempt minimums, but there is a 99% bonus. This, by not distinguishing between assets, fundamentally benefits the largest. In Madrid, practically everyone pays the tax, 700 million euros are collected every year. The per capita collection in Madrid and Asturias is very similar, the difference is how that burden is redistributed. And then there is a third model, which I describe as fiscal populism, which is the one applied by the autonomous communities now governed by the right, such as the Valencian Community, Andalusia or the Balearic Islands, where the Asturian model was previously applied. If they subsidize it to 99%, they pay the tax, but the tax burden of the middle and working classes is not alleviated. They exclusively relieve the rich, putting the sustainability of the regional budget at risk.
The ‘Asturian tax route’ is correct, but it must be simplified, there are too many deductions
–In Asturias, the tax multiplier coefficients (set based on the amount and degree of relationship) can reach 87.6%, the highest marginal rate in all of Europe.
–Very few autonomous communities have applied bonuses for groups 3 and 4, which include brothers, uncles, nephews or cousins. It is true that the tax law dates from 1987 and the family model has changed, and from here we urge the central State to review the legislation. We are heading towards a scenario in which, for example, more and more people will inherit from uncles or aunts, and it is true that there is some room for tax relief. But I have just landed in the Ministry and I have to analyze the accounts well.
–Asturias is among the regions where low and medium incomes pay more personal income tax, according to a study by the Registry of Tax Advisory Economists. You, however, in your appearance at the Meeting have expressed your refusal to deflate the rate.
–Fiscal effort and pressure are two very complex concepts to define. In any case, the fiscal pressure borne by the autonomous communities is quite even. A deflation that is perfect on paper maintains the progressivity of the tax, by its own definition, but the deflation that was proposed by right-wing regional governments was, in our opinion, regressive, because it benefited the highest incomes.
–And hence the so-called “Asturian way”.
–The Asturian route tries to concentrate this tax savings on the lowest incomes through deductions, and that serves to encourage birth rates and establish population in rural areas. Personally, it seems like a good way to go, but I think there are too many deductions. A model should be made with less, and that are clearer and have greater power. That is, stay with those that are really working, and enhance them.
–He has also said that he will not touch the Wealth tax.
–Man, right now it would be a bit ridiculous if in Asturias we were to renounce the Wealth tax, since the Solidarity of Great Fortunes tax is being applied, the collection of which is collected by the central Administration. In any case, I refer to the Organization for Economic Cooperation and Development (OECD), which is not exactly a Bolshevik organization and which recommends requiring an additional effort from large assets. Furthermore, I understand that they are the ones who enjoy public services the most, although paradoxically they use private schools and hospitals. They are the ones who benefit from the legal framework and legal security in which that heritage can exist and prosper.
–Many businessmen reproach that the Asturian framework is not ideal for creating wealth.
–On my return to Asturias I have encountered a series of expressions that I have not heard at any time in Madrid. Nobody in Madrid thinks that Asturias is an island or a fiscal hell, as I am hearing so many times here. It is a debate that I have encountered here, it is purely internal. And it is also focused on the fact that there is taxation that repels investment and business. That is not true. The regional powers regarding taxation refer exclusively to taxes levied on natural persons. VAT, corporate tax or social contributions are state responsibility. Therefore, this idea exclusively installed in Asturias is due to internal interests. It is about passing off as a problem of business competitiveness what is, purely and simply, specific interests of specific people. And I tell them to be careful about continuing with that catastrophic message and continuing to describe Asturias in that way, lest it transcend beyond here and end up doing terrible damage to business competitiveness.
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