Sánchez and Junqueras agree to guarantee ordinality in the new financing model

MadridKilling two birds with one stone. That's the metaphor that best defines what Thursday morning's meeting between the leader of ERC, Oriol Junqueras, and the Spanish Prime Minister, Pedro Sánchez, at La Moncloa Palace, meant. On the one hand, the approximately one-hour meeting served to seal the agreement for a new regional financing system that takes into account Catalonia's "uniqueness," as promised to the Republicans, and which would guarantee ordinality while also being applicable to the rest of the territories, as the Spanish government maintains. On the other hand, it is the first time Sánchez has opened the doors of La Moncloa to a top leader of the Catalan independence movement.after already meeting with Jordi Turull in June—, a gesture that adds to the "political normalization" that his government has long championed and that Its main pillar is the amnesty lawThe photo taken this Thursday of Junqueras and Sánchez shaking hands is, in fact, the political amnesty that the pro-independence movement, including Junts, has repeatedly demanded in parallel with legal amnesty.

After months of negotiations, Junqueras announced via social media X (formerly Twitter) an agreement for a new financing model. In net gains, the new system will mean an extra 4.7 billion euros for Catalonia, according to the ERC leader, speaking to the media after the meeting, from outside the Moncloa Palace: "It will be a brief appearance because the agenda is very full and the weather isn't cooperating," said Jun. The temperature was 4 degrees Celsius.

The additional money is the result, among other things, of an increase in the resources available to the autonomous communities under the common regime, but also of modifying the tax base of the autonomous communities within the financing system. This will be done by adjusting taxes such as VAT for SMEs, but also the current basket of taxes in the financing model, according to Republican sources, who assert that the new system leaves 55% of personal income tax revenue, 56.5% of VAT, and 58% of excise taxes in the hands of the autonomous communities. There would also be an additional injection of funds from the State, which ERC sources estimate at 21 billion euros. Those regions that wish to receive this transfer of resources would do so instantly, not in advance, which currently results in a delay in payment (this system is based on advance payments and settlements for two years of deviations). [Regarding ordinality?]

But in addition to these extra revenues, the Republican leader also stated that the new model entails "the application of the principle of ordinality." "If Catalonia is the third largest contributor [to the system], it will be the third largest recipient [of funds]," Junqueras asserted. It's important to note that the principle of ordinality means maintaining the same ranking in terms of both contributing and receiving funds, but it doesn't mean the proportion of resources is identical. This element has been one of the sticking points in the negotiations with the Treasury. which until recently was not open to studying itFor ERC, it was a condition sine qua non And, in fact, it's one of the advances the Republicans are most proud of.

There are many ways to determine this ranking, starting with how resources are distributed. In fact, it varies depending on whether the adjusted or actual population is taken into account—in real terms, ERC sources acknowledge that it would only move from the current tenth position to ninth. The person in charge of explaining the fine print will be the First Vice President and Minister of Finance, María Jesús Montero, who is expected to appear at a press conference this Friday.

Furthermore, ERC has always championed the idea that the Generalitat would be "in solidarity" with the regions with less economic capacity to contribute to "equity between territories." A new fund will come into play here, which will determine a quota or solidarity contribution that Catalonia will have to make, amounting to nearly 5.5 billion euros, according to Republican sources.

Meanwhile, in Catalonia, Junqueras and the President of the Generalitat, Salvador Illa, will meet this Friday. For Illa, Thursday's step forward represents a glimmer of hope for a new budget in Catalonia. Republican sources explain to ARA that the Generalitat will have to address the unique characteristics of Catalonia that the budget model will have to consider: this means the supplementary resources that must guarantee funding for non-homogeneous responsibilities, which in the Catalan case include the Mossos d'Esquadra (Catalan police force), prisons, and the protection of the Catalan language, among others. The same sources assure that this money would be added to the 4.7 billion euros of the general system, although the details will be finalized in the future within the framework of bilateral negotiations with the Spanish State. According to informed sources, these additional resources could be specified in a bilateral State-Generalitat commission at the end of January. –reports Martina Alcobendas.

However, there has been no progress on Catalonia's collection of all personal income tax (IRPF), an issue that remains stalled. This Thursday, Junqueras warned that without this, it is difficult to open negotiations for new public accounts at the national level, but also in Catalonia. This was the only discordant note of the meeting.

"Everyone wins"

Junqueras, who acknowledged that the new model will need the support of a majority in Congress to succeed –ERC anticipates it will come into effect in 2027–, defended it as a "good agreement" for businesses, workers, and families in Catalonia. However, the top representative of the Republicans also echoed the message often delivered by Montero: that a new financing model goes beyond the bilateral Catalonia-State relationship, thus also focusing on the other autonomous communities: "Nobody loses and everyone wins," Junqueras asserted. Hours before the agreement, Isla had also predicted "good news for Catalonia and Spain as a whole."

At La Moncloa, they expressed satisfaction with Thursday's agreement. In fact, they embrace the proposal, which, among other things, involves abandoning the current model of regional financing, which expired in 2014. "It guarantees more resources for all regions. It's a new system in which all territories will receive more transfers [of resources] to strengthen the welfare state," government sources point out.

The challenge for Pedro Sánchez's government will be to confront the criticism from the PP, which governs in almost all the regions, regarding alleged preferential treatment in Catalonia—the proposal will have to be discussed in the coming days at a Fiscal and Financial Policy Council meeting. A message that even some share. males Socialists. However, those at Moncloa Palace are downplaying it. They not only maintain that the agreement reached this Thursday is "yet another sign" that they are still in power—and intend to remain so until 2027—but also that they are not worried it will affect them in the upcoming regional elections.