Cristóbal Montoro spoke to Congress yesterday, and things could not have gone worse. He did not clear up questions about the Bárcenas case and revealed that Spain's regional governments have overspent and his Ministry of Finance's tax amnesty program has failed.
Pressured by Congress, Minister of Finance Montoro said that if the ex-treasurer of the Peoples' Party had accepted the tax amnesty program through a holding company, the tax registration would not have been valid. This is a weak explanation for a scandal that the governmetn should clear up quickly and legally if it wants to avoid suspicion. Especially if they are as controversial and destined for failure like the tax amnesty program. The Ministry of Finane registered 40,000 taxpaying entities out of 29,065 citizens and 618 legal entities, and it only collected 1.192 billion euros in tax revenues. In other words, the tax rate was less than 10% and settled around 3%, which will increase the burden for taxpayers who are trying hard to meet their obligations.
As if that were not enough, Montoro, who said he had total control over regional government accounts, could not explain why Catalonia finished 2012 at 1.5% above its 2.3% deficit objective. The minister assured that through November Catalonia was in a position to meet the objetive according to information from his department, the Ministry of Finance.
So what happened since then? If Catalonia was increasing its spending, the Ministry of Finance should have detected the abberation and figured out the reason. Instead, we saw zero control from a department that promised tight oversight of Spanish regional government accounts.
