THE Balearic and Catalan finance ministers, Pere Sampol and Francesc Homs respectively, called for “a re-balance” in the general finance system to meet a negative fiscal balance in both regions and to boost public spending. If more funds are not made available for transport, telecommunications, social services and training, “the engine of our economy, and therefore the engine of Spain, will grind to a halt,” Homs said. He proposed a new model of finance via changes to the Catalan statutes, within the limits laid down in the Spanish Constitution.
To combat the fiscal deficit, the two ministers proposed changes in the current system of general finance, such as giving both regions control of tax affairs, “taking on the risks and if necessary, tightening our belts,” Sampol said. Homs, Sampol and Joan Zabala, representing the Basque government, were taking part in the first congress on the economy of the Balearics which was closed yesterday by Balearic leader Francesc Antich. The debate in which they took part was on regional finance and the effects of the fiscal balance on development.
The moderator was Guillem Lopez Casasnovas, who said that the fiscal balance was negative for Catalonia and the Balearics because between seven and ten per cent of their Gross Domestic Product goes to the State each year but is not reinvested in the two regions. Homs described the political and financial development achieved by the regions under democracy as “very positive,” but he added that it was time to revise the model “after years in which the citizens of Catalonia and the Balearics have contributed more money than they have received.” He added that the contribution to the State was too large and should be reduced.
Sampol said that the Balearics is, percentage wise, the territory which contributes most to the State but receives least.
He said that the fiscal situation was unsustainable and proposed a system whereby the Balearic government collected the taxes and paid the State for general services.

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