The Generalitat and the State formalize the new financing with an eye on personal income tax.

BarcelonaTwo weeks later than agreed, the Generalitat-State Bilateral Commission will finally meet this Monday with the new financing model for Catalonia on the table. The meeting should serve to formalize the agreement signed between the PSC (Spanish Socialist Workers' Party) and ERC (Spanish Regional Government) to invest Salvador Illa, that is, what was a financing pact between the two parties will now be assumed by the State. However, this will not yet specify any figures regarding what the new system would represent for Catalonia. At the last Bilateral Commission, held in February, nothing was addressed regarding financing, but rather The Generalitat and the State agreed on other issues such as increasing the Mossos d'Esquadra staff to 25,000 by 2030.. That meeting was already chaired by the Minister of Territorial Policy, Ángel Víctor Torres, on behalf of the Spanish government, and the Minister of the Presidency, Albert Dalmau, on behalf of the Generalitat. Also attending the bilateral meeting this Monday, on behalf of the Catalan government, will be the Minister of Economy, Alícia Romero.

Both governments will lay the foundations for the new model, which places solidarity and ordinality as fundamental pillars, but the specific steps to follow to implement it will not be discussed. It will also be specified that the Catalan Tax Agency must progressively collect taxes, starting with personal income tax, but the details of the asThis is where the PSOE and ERC are stuck, as they are working in parallel on legal reforms to make this possible: they are negotiating a bill in Congress, which will not be presented to the Bilateral Commission this Monday. This Saturday, ERC leader Oriol Junqueras warned that the Catalan Treasury cannot be subordinated to the state treasury."The Catalan Treasury must coordinate with other agencies, but it must be able to fully exercise its powers and functions and cannot be subordinated to the state agency. Furthermore, it must do so within well-defined timeframes."

Both parties have given themselves time this July to reach an agreement on a law that will modify the Organic Law on the Financing of the Autonomous Communities (LOFCA) (22/2009), the law that regulates the financing system of the autonomous communities under the common regime, and the law on the transfer of taxes to Catalonia (16/2010). If they reach an agreement, they will still have to convince the Spanish government's parliamentary partners to endorse it. Until now, some parties such as Compromís have opposed Catalonia having a unique financing system.

The difficulty of collecting taxes

The Catalan government has already begun sizing the Catalan Treasury to prepare it for collecting personal income tax and has launched a call for new positions to increase its human resources. Just over a month ago, The executive committed to creating 200 structural positions throughout that year, as a first step to prepare the agency for the milestone set in the investiture agreement: collecting personal income tax in 2026. A goal that all expert sources consulted already admit is impossible, since preparing the ATC will still require between three and five years. The Catalan Treasury currently has around 850 civil servants, and according to some estimates, between 1,000 and 1,500 more would be needed. These workers are not easy to find—they require a lot of training—and that is why a transitional period of collaboration with the Spanish Treasury would be necessary, according to negotiation sources, to begin collecting income tax from Catalonia. This coordination on which there is currently no agreement.

For the time being, the Catalan government has committed to the ERC (Republican Socialist Workers' Party) to having a master plan drawn up by July 31st for the "progressive" implementation of personal income tax in the ATC (ATC). This document should specify how the collection will be implemented. When the Minister of Economy, Alícia Romero, explained this agreement—in exchange for the Republicans' endorsement of the third credit supplement—at the end of May, she attempted to downplay the inclusion of the word "progressive" in the agreement and reaffirmed her commitment to collect all personal income tax in 2026. 2026, that's why we have put progressively. In any case, all personal income tax must be collected by 2026," he pledged, despite the lack of preparation of the ATC. Aside from specifying the collection model, in order to fully comply with the investiture agreement, it remains to be determined how the solidarity quota that Catalonia should contribute to the rest of the State would be calculated.

Last week, Catalan government spokesperson Silvia Paneque stated that the agreement emerging from this Bilateral Commission would "fulfill" the agreement signed with ERC for the investiture of Salvador Illa. However, the regional minister for Territory did not explain why the Catalan government has not yet made public the report prepared by the committee of experts on financing, appointed by the executive itself and led by Martí Carnicer. The report was intended to serve as the basis for designing the new model for Catalonia. However, Paneque did explain that the proposal emerging from the Bilateral Commission "will leverage the work" of the committee of experts and, in this regard, assured that they would explain "which elements of the committee of experts have been incorporated and which have not."

Be that as it may, the Spanish and Catalan legislatures depend on progress on financing. ERC has made its support for issues such as the budget conditional on the beginning of this new system. Oriol Junqueras himself said this Saturday in a press conference prior to this Monday's Bilateral Commission: "We cannot aspire to new agreements if current agreements are not complied with." The Republicans, in fact, have repeatedly criticized the Socialists for not prioritizing this issue in recent months and have directly accused the Minister of Finance, María Jesús Montero, of delaying the issue so as not to harm her candidacy for the upcoming Andalusian elections. Specifically, in recent hours, the First Vice President of the Spanish government has attempted to allay the misgivings that have arisen within the party by assuring them that the unique model for Catalonia can be extrapolated to any other region that requests it.