Salvador Illa withdraws the budget and ERC no longer sets the personal income tax as a red line.

BarcelonaSalvador Illa decided to push ahead after ERC's refusal to negotiate the budget and presented the bill two weeks ago without having the Republicans' support guaranteed. This pressure tactic against Oriol Junqueras' party failed to budge them from their position: the Republicans had thus far maintained their demand that the Spanish government make a gesture by ceding control of personal income tax revenue. The budget was headed for failure this Friday, because Esquerra claimed it would vote for its amendment in its entirety, thus defeating the bill. But to avoid a parliamentary defeat, Salvador Illa decided to withdraw the budget this Wednesday. as some sources consulted by the ARA pointed out This Tuesday, and to give negotiations with the Republicans another chance. However, Esquerra has also made moves and, at this point, no longer refers to income tax as a condition. sine qua non to negotiate the budget. "It's a very important condition," Oriol Junqueras stated when journalists asked him if it remained an "essential" condition. In fact, Esquerra has opened itself to negotiating an alternative proposal to the Personal Income Tax (IRPF) if the Catalan government puts one on the table. Both parties have committed to having a budget before the summer.

Illa appeared at the Palau de la Generalitat to defend the decision, announced shortly before in a joint statement by the PSC and ERC, whose executive committees met early this morning. The president explained that he made the move for "stability and responsibility," and added that this Thursday he will convene an extraordinary executive council meeting to approve a single supplementary credit of more than 5 billion euros that "guarantees the functioning of public services" while they continue talks with the Republicans. He stated that these talks are expected to be successful: "We have reached an agreement to provide Catalonia with a new budget," he said. Oriol Junqueras, for his part, celebrated that the Catalan government had finally withdrawn a budget "that it had presented unilaterally and without prior consultation." The agreement was reached after several meetings in recent hours. In fact, Illa and Junqueras met until late Tuesday. In a joint statement, the PSC and ERC parties argued that a new budget is necessary for Catalonia to "continue developing the country, protect public services, and implement the investiture agreements." They committed to negotiating in the coming months to approve the budget "before the end of the current parliamentary session." "The conditions weren't right for negotiating a budget because the PSOE had failed to meet its commitments. The Catalan government couldn't unilaterally impose a budget on us," Junqueras asserted.

Illa, who has made it clear that the final agreement will be compatible with the pacts already reached with the Comuns, unions, and employers' associations, framed the decision to exhaust all budget options within the context of global instability, especially in the wake of the US-Israeli war in Iran. A "risky" scenario, he said, that "obliges us to be prepared and united." "Catalonia must be prepared to face any scenario," he added. In the statement from the PSC and ERC, in fact, it is emphasized that the budget "will have to internalize the economic impacts of the current international situation, incorporating policies that help build a social safety net to protect the most affected sectors." "We cannot afford to jeopardize the social safety net that families, workers, and businesses need," Illa said.

The condition of the Personal Income Tax (IRPF)

What about income tax? In their joint statement, the Socialists and Republicans explicitly state their commitment to "continue promoting negotiations and the necessary legislative changes to implement the investiture agreements," a clear reference to the management of income tax, which the Republicans are demanding as a condition for reaching a budget agreement, although this is not explicitly stated in the statement. ERC has been asking the Spanish government in recent months to implement the necessary legislative changes so that the Catalan Tax Agency (ATC) can collect income tax. One of these changes would involve modifying the Organic Law on the Financing of Autonomous Communities (LOFCA), which the Minister of Finance, María Jesús Montero, rejects.

"Both political parties are giving ourselves more time to explore avenues within the framework of the signed agreements that should allow us to preserve the country's stability at this particularly turbulent time," they state in the communiqué. Junqueras has assured that they will continue "fighting" to secure the revenue from the Personal Income Tax (IRPF), "if necessary, by not approving a budget." However, he also added that if the Catalan government wants to present an alternative on this issue, they are open to negotiating it. "If the Catalan government proposes an alternative, let them propose it, we will negotiate it," Junqueras stated. In other words, the key to all this is to buy time for the Spanish government to make a gesture regarding the IRPF, but if that doesn't happen, the Catalan government can put forward an alternative that convinces Esquerra Republicana (ERC) to negotiate the budget. At this point, however, it remains unclear whether the Republicans will sit down to negotiate the budget while simultaneously negotiating the investiture agreements, such as the IRPF.