The lack of specificity of the financing agreement

The Generalitat-State Bilateral Commission held this Monday in Barcelona was supposed to serve to formalize the Spanish government's endorsement of the investiture agreement for Salvador Illa signed a year ago between the ERC (Republican Workers' Party) and the PSC (Spanish Socialist Workers' Party). That agreement had two main pillars: on the one hand, the commitment that the Catalan Tax Agency (ATC) must eventually collect all taxes, starting with personal income tax in 2026, and on the other, a new financing system for all autonomous communities that respects the criterion of ordinality. Well, in the end, neither one nor the other is taken for granted in the agreement signed between the two governments.

Regarding personal income tax collection, we at ARA have already explained that the commitment to collect it all next year is unaffordable due to the ATC's lack of resources, which must gain many more resources to go from managing 5 billion to 25 billion. It is understandable, therefore, that neither government has set deadlines. However, it is disturbing that the agreement also fails to mention that the horizon should be for the ATC to be the sole tax administration in Catalonia and, instead, insists that both must coexist within a framework of collaboration and "networking."

But it is even more disappointing that no reference to ordinality is made among the signed agreements. It is mentioned, however, in the explanatory statement, but precisely to emphasize that it is a criterion defended by Catalonia and that the State, for the moment, has not embraced it. In fact, Minister Ángel Víctor Torres said in a press conference that ordinality will be the subject of discussion in a joint working group. This reluctance of the Spanish government to accept a criterion that, while it places limits on solidarity, is endorsed by many experts and the vast majority of Catalan socioeconomic stakeholders is suspicious. In fact, even the transferred Josep Piqué, while leader of the PP in Catalonia, defended him in 2012.

Perhaps the Spanish government is trying to mitigate criticism of the new system, but this is a hollow pretense. Even though no figures have been put on the table, nor has the Catalan solidarity quota been calculated, the PP and many autonomous communities have already raised their voices and, beware, are threatening to appeal to the Constitutional Court. The most striking has been, as usual, the president of Madrid, Isabel Díaz Ayuso, who has even said that the system "is a death sentence for Spain."

Given this scenario, the Spanish government should be much more courageous and ambitious and present a system that substantially improves the accounts of the autonomous communities, especially those with large chronic fiscal deficits, such as Catalonia, the Valencian Community, or the Balearic Islands. If the ordinality criterion is applied, Madrid will also benefit greatly. The question is, given the vagueness and timidity of the agreement, whether María Jesús Montero, who will be the next PSOE candidate for Andalusia, is the right person to lead these negotiations. For now, there's been a lot of noise but little concreteness.