Tax battles stir up rebellion in the regions

Taxation is fast becoming the most important battleground in the fight by Europe's independently-minded regions for greater autonomy.

But, whereas in Scotland the debate has centred on the right of a new Scottish assembly to raise taxes above levels in the rest of Britain, in Spain, Belgium and Italy the position is reversed: the Basques, Flemish and Northern League want to reduce the burden of taxation.

A conflict is simmering between Madrid and the Basque country over corporate tax, which the Basque government last year cut to a rate lower than in the rest of Spain - from 35 to 32.5 per cent. Its aim is to attract more investment to the region and offset the damaging effects of terrorism and industrial decline.

But Madrid says the Basques have no right to impose the lower rate and in September flung down a court challenge to the Basque government. The national government fears that the incentive offers too tempting a sweetener for companies and that other regions will be put at a disadvantage. It also fears that other autonomous regions might get the same idea.

The measure does not affect the amount of tax remitted to Madrid, which remains, in accordance with a devolution pact drawn up after Franco's death, at 6.24 per cent of Spain's national spending on defence, foreign affairs and the monarchy.

The Basque government takes the view that it is up to them how they raise that sum. "What we gather in taxes doesn't affect how much we pay the state," said the Basque Prime Minister, Jose Antonio Ardanza, recently.

The signs are that the Basque incentives are working. The British-based Coopers & Lybrand accountancy group moved its Spanish base from Madrid to near Bilbao last year, principally for tax reasons, they said, and others are following. The Basques have also squeezed from the government a concession to collect taxes on petrol, tobacco and alcohol.

Catalonia, too, has fought for greater control over its tax revenue, but this time over income tax, in a formula which the Catalan leader Jordi Pujol seeks to generalise throughout Spain. Under a deal struck between the ruling Catalan nationalists and the minority government in Madrid, regions will retain a third of income tax raised within their territory; this clearly benefits the richer regions like Catalonia. In the previous setup, the regions had to apply to Madrid for repayment of their share.

Similar patterns are repeated in Italy and Belgium, both countries experiencing strong centrifugal forces. The regional government of Flanders has already won far-reaching autonomy within the Belgian federal system, and wants to win authority over tax and social security from the central state.

The Flemish leaders complain that Flanders, a relatively prosperous region of Belgium, is currently having to dish out vast sums to help pay the social security bills of the more impoverished French-speakers in southern Wallonia, where unemployment is as high as 20 per cent in some areas. If it were not for the problems of Wallonia, Belgium would have no problem meeting the Maastricht criteria for monetary union, say the Flemish.

In Italy, the Northern League has been calling for a regionally-based tax system so that money earned in the north is not syphoned off by the "thieves in Rome" and redistributed to a centre and south that the League's exponents consider to be irretrievably backward and corrupt.

The reason why taxes have become an issue is partly that the Basque country, Flanders and northern Italy are all wealthier regions than average for their states. Taxation has historically aimed at redistribution of income to the lower-paid but also to the poorer areas, in part to assure the very state cohesion which is questioned by the separatists and by advocates of greater autonomy.

In Belgium, opponents of decentralisation argue that granting Flanders autonomy over tax and social security would hit at the heart of the state, increasing the possibility that Belgium itself might one day break up. Yet that - for the more radically minded Flemish separatists - is precisely the point.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
glastonbury
News
i100
Arts and Entertainment
Shock of the news: Jake Gyllenhaal in ‘Nightcrawler’
filmReview: Gyllenhaal, in one of his finest performances, is funny, engaging and sinister all at once
Arts and Entertainment
Shelley Duvall stars in Stanley Kubrick's The Shining
filmCritic Kaleem Aftab picks his favourites for Halloween
News
people
Arts and Entertainment
Kit Harington has been given a huge pay rise to extend his contract as Jon Snow in Game of Thrones
tv
Life and Style
Taste the difference: Nell Frizzell tucks into a fry-up in Jesse's cafe in east London
food + drinkHow a bike accident left one woman living in a distorted world in which spices smell of old socks and muesli tastes like pork fat
Sport
Luke Shaw’s performance in the derby will be key to how his Manchester United side get on
footballBeating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Life and Style
Google's doodle celebrating Halloween 2014
tech
Arts and Entertainment
Don’t send in the clowns: masks and make-up conceal true facial expressions, thwarting our instinct to read people’s minds through their faces, as seen in ‘It’
filmThis Halloween, we ask what makes Ouija boards, demon dolls, and evil clowns so frightening?
News
peopleFarage challenges 'liberally biased' comedians to 'call him a narcissist'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Senior IP Opportunity at Major Firm

vary Attractive Salary: Austen Lloyd: MANCHESTER - AN OPENING AT A VERY HIGH Q...

Nursery Manager

£100 - £110 per day: Randstad Education Ilford: Nursery Manager Long term Ran...

Sales Consultant – Permanent – West Sussex – £24-£25k plus commission and other benefits

£24000 - £25000 Per Annum plus company car and commission: Clearwater People S...

SEN Teaching Assistant

£45 - £65 per day: Randstad Education Bristol: Supply SEN Support Jobs in Bris...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes