The Economic Circle is committed to "federal" financing and distances itself from the Basque agreement.

BarcelonaIn an opinion piece published this Thursday, the Círculo de Economía (Economic Circle) advocated a reform of the regional financing system similar to that existing in "federal" countries such as the United States and Canada, and has moved away from implementing in Catalonia a model like the regional agreements already in place in Navarre and the Basque Country.

As it has been advocating for years, the business entity describes it as "key" for Catalonia and Spain that the Spanish government and the autonomous regions agree on a new financing model, especially in the case of the Generalitat (Generalitat), and welcomes theagreement between PSC and ERC to move it forward"If reform was necessary a decade ago, it is essential today," reads the note, which points out that the current system, dating back to 2009, should have been reformed by law by 2014.

Thus, despite its clearly favorable position on a system that provides more resources to the Generalitat (Catalan Government), the Círculo distances itself from the possibility of Catalonia obtaining a system comparable to the Basque and Navarrese agreement. Specifically, the Círculo defends a model in which the State and the Generalitat share the tax base. That is, double taxation on taxes such as personal income tax and VAT, with one state tax and another Catalan tax, and each administration can set them as it wishes without influencing the other—a system similar to that in force in the United States and Canada. Jaume Guardiola, president of the institution, argued in a press conference in Barcelona that the proposal is written with "the federal vision that the Círculo has always had."

Another difference with the Basque-Navarrese regional model is that the Círculo views the complete independence of the Catalan Tax Agency (ATC) and the fact that it coexists with the state agency, the AEAT, as problematic. The Círculo believes that the presence of representatives from the central administration in the governing bodies of the ATC would be "desirable" to improve coordination and avoid further risks of tax fraud. This, in fact, is one of the points of contention between the PSC and ERC, as the former want tax management to be done through a consortium between the Generalitat and the State, while the latter opt for a 100% in-house tax agency like in the Basque Country and Navarre. However, Guardiola noted that the text "does not mention the consortium."

Furthermore, Guardiola considered that, despite being positive, the recent forgiveness of the regional debt with the State It should have been done following the principle of which autonomous regions are most harmed by the current system.

Solidarity hand in hand with ordinality

The organization applauds the fact that the proposal agreed upon between the PSC and ERC includes a solidarity component for Catalonia with the rest of the Spanish territories. The Circle's vice president, Teresa Garcia-Milà, asserted that if the regional model were applied to all regions, participation in inter-territorial solidarity would be "so small that it would not be sustainable," because "there would come a point where there would not be sufficient resources."

In this regard, the text also unwittingly attacks the PP and Vox, the two parties most critical of the agreement and who accuse the proposal of eliminating any Catalan contribution to compensate the autonomous communities with fewer resources. "There are voices from outside Catalonia, out of ignorance or bad faith, that persistently question this intention. We must once again remember what is being questioned; on the contrary," the Circle's statement reads.

"What would make the most sense is for this solidarity to be articulated from the central administration," the document adds, as it would ensure that all autonomous regions "have the necessary resources" and "would prevent horizontal equalization from being perceived as a zero-sum game" in which what one territory gains another loses. In this sense, the Círculo believes that the solidarity mechanism should be "transparent," "effective," and "fair." And on this last concept, the Círculo is in favor of introducing—as envisaged in the agreement between the PSC and ERC—the principle of ordinality, which is not currently present in the current model and which would prevent a situation like the current one, in which territories that contribute less end up obtaining more resources per inhabitant than those that contribute more.

More contributions from Madrid

The Circle document points out that the Community of Madrid should have an additional contribution to solidarity because benefits from the capital effectGuardiola noted that the Spanish capital has "40 percent more civil servants per 100 inhabitants than Catalonia," primarily due to the presence of state agencies. "Civil servants have an average salary between 25 percent and 40 percent higher than those in the private sector" and "are not at risk of losing their jobs" during a crisis, which represents "an enormously powerful automatic stabilizer," he added. "All of this must be analyzed with a rigor that we have not seen until now," the president of the organization emphasized.