New milestone, new funding
In politics, you never win by a landslide, just as you don't reach a prominent position by taking shortcuts. It requires hard work and perseverance, maintaining clear ideas, ambition, and rigor. The financing agreement announced yesterday is a new milestone on this path: an important step toward correcting the chronic underfunding that Catalonia has suffered for decades.
It is not an isolated step. It adds to other agreements reached in recent years: the cancellation of €17.104 billion of FLA debt (with savings of €1.368 billion in interest); the €150 million annually to strengthen Catalonia's research ecosystem; the improved funding for the Mossos d'Esquadra (Catalan police force) and other non-homogeneous responsibilities; and the transfer of the commuter rail network, with the necessary resources to begin improving a long-neglected network. Negotiations are also well advanced to create an Investment Consortium that will guarantee that state investment funds for Catalonia are received at the beginning of each year and are guaranteed, thus correcting a systematic and unacceptable under-execution of investments. And, of course, one of the key issues remains very much open: the transfer of personal income tax revenue.
All these elements—and some others that space does not allow us to detail—should contribute to significantly reducing the fiscal deficit. It would not be accurate to speak of eliminating it, but rather of reducing it to a degree never before achieved.
Regarding the new financing model recently announced, I would like to highlight five positive aspects:
1. First, the financial capacity of the autonomous communities will improve by an additional 20.975 billion euros, which represents a redistribution of resources from the central government's budget. This implies greater taxing capacity and more self-government for the Generalitat, responsible for financing the bulk of essential public services in Catalonia, and also allows for strengthening other areas such as housing, industrial and energy policy, culture, and investment. 2. Second, the differences between the best-funded and the most disadvantaged regions are substantially reduced. The inequalities accumulated until now were unjustified: the current model grants the best-funded region (Cantabria, with €5,697/inhabitant) 41% more per inhabitant than the worst-funded (Valencian Community, with €4,046/inhabitant), while with the new model this gap is reduced. 3. Third, advance payments are eliminated, which will allow for the collection of funds in real time. The current system is based on revenue estimates—almost always underestimated—and a final settlement that arrives two years later. Eliminating this delay represents a significant structural improvement and a qualitative leap forward in financial autonomy. 4. Fourth, it opens the door for communities that wish to do so to collect the VAT generated by SMEs based on actual revenue, rather than an estimate based on domestic consumption. This is a very favorable measure for Catalonia (+€1.353 billion), given the high number of SMEs, and allows for a much closer relationship between revenue and the territory's actual economic activity. 5. Fifth, a €1 billion climate fund is activated, with a particularly positive impact on the Mediterranean region, one of the areas most affected by global warming.
Taken together, these measures entail an annual increase in revenue for the Generalitat of €4.686 billion, representing 22.3% of the total increase and a 15.3% growth compared to the current model. This increase allows for adherence to the principle of ordinality in terms of population density. Under the existing model, Catalonia ranked ninth; with the new agreement, it ranks third, the same position it occupies according to its tax capacity, with a relative index of 104.14%.
The overall assessment is therefore positive: a partial victory, a step forward. The result of months of intense negotiation and a necessary milestone for improving public services and strengthening the Generalitat's financial capacity in a demanding global context. The delegation of personal income tax collection is not a closed issue and must become a reality by 2028. It must be approached with ambition, perseverance, and a timeline, because agreements must be honored.
Mountain climbers know well the importance of moving between base camps, and also of retreating if necessary to regain strength. The skepticism of some is understandable, but in politics, real progress is usually partial and cumulative. Concrete and tangible progress, without abandoning the ambition of the underlying objectives. Only in this way can we achieve a fair and rigorous financing system, commensurate with the tax effort of citizens, SMEs, and the self-employed.