The mutation of the financing agreement that Salvador Illa invested in

BarcelonaWhat has become of the "solidarity economic agreement," the title given by the ERC leadership—at that time headed by Marta Rovira—to the financing agreement that would ultimately lead to Salvador Illa's downfall? The President of the Generalitat never embraced the concept of an "agreement," nor did the Spanish government. What was put in writing in July 2024 stipulated that Catalonia would collect all taxes, cede a percentage to the State, and establish a solidarity quota. A year and a half later, the agreement between the Spanish government and Esquerra—in which The State will allocate almost 4.7 billion euros to Catalonia– differs substantially from what Isla brought to the Palau de la Generalitat.

To begin with, Catalonia will not collect all taxes in the short term, nor is this likely to happen in the future. "That the Generalitat manage, collect, settle, and inspect all taxes paid in Catalonia," stated the July 2024 agreement. The only option included in the proposed new financing plan is a "network management" system between the national tax authorities and those of the autonomous communities. It does specify, however, that those autonomous communities that wish to do so may opt for a "shared fund" system in which personal income tax revenues are paid "simultaneously" to both the national and regional tax authorities.

The agreement signed to invest Illa as Prime Minister stipulated that Catalonia would begin collecting personal income tax (IRPF) as early as 2026. This forecast was delayed by the Catalan government, in conjunction with the ERC (Republican Left of Catalonia), until 2028. In fact, this issue remains a stumbling block in the negotiations between the two parties. The Republicans have stalled in Congress the proposed law that would legally authorize the Catalan Tax Agency (ATC) to collect IRPF. A law they plan to reactivate in FebruaryEsquerra has made resolving this issue a condition for beginning negotiations on the Catalan and national budgets. Is a PSOE vote in favor enough to begin processing the legislation, or is some further gesture needed? Oriol Junqueras' party has not specified.

No paradigm shift

The model signed in 2024 also stipulated that Catalonia's contribution to state expenses would be made through a "percentage of tax revenue sharing," meaning that Catalonia would transfer part of its taxes to the state, unlike the current system. This paradigm shift is not included in the model presented by Montero. The Treasury has committed to increasing the percentage it transfers to the autonomous communities from both Personal Income Tax (55%) and Value Added Tax (56.4%). The model agreed upon by the Socialists and Republicans also stipulated that Catalonia would continue contributing to solidarity with the rest of the country. Under the new model, each community must reach 75% of the adjusted average per capita resources of all the territories. Those that do not achieve this will be compensated. This solidarity was to be limited by the principle of ordinality, as established in the investiture agreement. An ordinality that Montero guaranteed for Catalonia when the new financing model is implemented, planned for 2027 – provided Congress approves it – although for now, it is not expected to be legally protected for the remaining years.

Despite the agreements reached so far, the financing of non-homogeneous powers, that is, those that Catalonia has unlike other autonomous communities, such as the Mossos d'Esquadra (Catalan police), still needs to be finalized. Esquerra Republicana (ERC) has stated in recent days that they have agreed to the additional transfer of 21 percent of VAT revenue to finance these powers. An agreement has also not yet been reached to establish the investment consortium, which is intended to oversee the execution of state investments in Catalonia.

Internal criticisms

According to the Esquerra leadership, the agreement now reached with the Ministry of Finance is not final, but rather a starting point in the current context. However, the fragility of the Spanish government does not bode well for the agreement's evolution, especially given that other partners have already voiced strong objections. For this reason, several Republican voices critical of the current leadership raised their hands last Saturday at the national council to inquire about the differences between the agreement signed in 2024 and the current one. "There's a reinterpretation of the agreement," one of the critics pointed out. Other critics believe that the pact "completes a policy of resignation" on the part of Junqueras' leadership.

Alba Camps, former member of parliament and Xavier Godàs's running mate in New National Left—the alternative candidacy to Junqueras in the primaries a year ago—has publicly called for an internal consultation to vote on the agreement now signed by the leadership. A similar request has been made by the critical faction of Col·lectiu 1-O, which is collecting signatures for a referendum that the leadership has rejected. Former city councilor and regional minister Alfred Bosch—who was part of the Foc Nou candidacy in the primaries—has also opposed the pact, stating his objections in an article in the online publication. The WorldHe called it "a deception."