On Friday Spain's Council of Ministers approved a measure to create an Independent Tax Authority to regulator the national budget process. The ITA will be modeled after similar regulators in other countries. Still, a professional association of tax specialists says that the way that Montoro and the Ministry of Finance would manage the project "sows doubts about legitimate independent oversight."
The fears are real. Montoro plans to recommend the ITA's leader to the Council of Ministers. The leader will have a three-year term renewable for another three years after that. Several divisional managers will be elected. The Council's participation is practically non-existent. It is fallacious to talk about independence of an institution whose members are named by the organization it is supposed to monitor. The government is deceiving itself if it believes that this reform is going to achieve its objectives of increasing transparency and oversight of Spain's budget process and financial sustainability.
The big question is whether the EU will think the ITA is adequate. In other words, will it really be independent? In Spain, we have more than enough experience with so-called independent institutions that don't fulfill their roles because of close ties with the executive branch of government. It is difficult to imagine that with this framework the ITA will work and that someone can finally manage a timely and effective budget process. It is a big deal that the government is not taking some reforms seriously and that within the Council of Ministers nobody is speaking up to say that hand picking the ITA will cause it to not meet its mission.
