Treasury sends in writing the proposal of the new financing to the autonomies: Catalonia would receive 4,686 million euros more per year

MadridThe Ministry of Finance, led by Arcadi España, sent a first draft of the new funding proposal in writing to all autonomous communities yesterday, which ARA accessed, and which maintains what the Spanish government agreed with the Generalitat and Esquerra, who have negotiated until the last hour with the minister's team. This is the first time the Spanish government has detailed the pillars of the proposal, as until now it had only been introduced verbally in the Council of Fiscal and Financial Policy in January. It is, therefore, a step forward to truly embark on the process of approving the model.

The new approach is good, according to the ministry, for all autonomous communities, but in absolute numbers Catalonia would be one of the most benefited: it would receive 4,686 million euros more per year under the funding model.

In total, the same sources assure, if the model comes into force in 2027, the communities would receive "20,975 million more next year" than with the current funding system. "The government's proposal is objectively positive for all autonomous communities insofar as it increases resources for all," say ministry sources. "There are no objective elements to oppose it," considers Minister Arcadi España, who argues that it would be an injection of resources for the welfare state, in the hands of the autonomies.

According to Hacienda's calculations, the new system would provide around 224,500 million euros, a much higher figure, they say, than that of 2023, which stood at 152,484 million. However, even though according to the ministry all autonomies gain, only the Generalitat supports the model, as it has worked on it together with España's and Esquerra's team. As this newspaper explained this week, the Spanish government has not managed to convince the common-regime communities governed by the PSOE either. Emiliano García-Page's Castilla-La Mancha has opposed it from the start, while Adrián Barbón's Asturias, whom they aspired to convince, also maintains its rejection of the system. However, Hacienda attacks the PP for not wanting to even sit down and negotiate, also considering it "incomprehensible" that they did not vote in favor of the stability objectives at Monday's meeting for the State budgets of 2027.

The Spanish government maintains an open hand to dialogue with the PP and PSOE communities on July 14, when the permanent technical committee of the Council of Fiscal and Financial Policy is to meet. Subsequently, on July 29, all regional councilors will meet. However, negotiating sources admit that it is unlikely that the system will be touched: it is agreed with Esquerra and the Generalitat and any change could unbalance their calculations. Once this procedure is overcome, the new model will be approved by the council of ministers and, subsequently, will be processed in Congress, which is where Junts will hold the key for it to move forward or not, taking into account that PP and Vox will oppose it.

The keys to the model

The Treasury has put in writing what Esquerra and the previous minister, María Jesús Montero, now leader of the opposition in the Andalusian Parliament, had negotiated. Below are the key points of the model:

• Change in the variables to calculate adjusted population. It should be borne in mind that adjusted population is what determines the resources distributed to each community, as it is a weighting between the real population and the real cost of services, taking into account demographic variables such as population age, surface area, insularity... The new model changes the weightings. The issue was that Esquerra requested that the calculation be closer to the real population that Catalonia had in order to obtain more resources than the adjusted one, which subtracted them. Finally, they reached an agreement on the formula so that the additional money received by Catalonia would exceed 4,000 million.
• A new VAT criterion for small and medium-sized enterprises is also introduced, which would allow autonomous communities to receive the resources from this tax generated in their territory. A criterion that theoretically benefits Catalonia because it is one of the autonomies with the largest business fabric.
• The percentage that the communities would receive corresponding to the general VAT and the IRPF also increases, which would go from the current 50% to 56.5% and 55%, respectively.
• The system incorporates a horizontal equalization fund and a vertical one. The former aims to ensure that "75% of the basic tax capacity is distributed in such a way that each community receives the same per adjusted inhabitant." This means that richer autonomous communities transfer, in practice, resources to poorer ones. However, parallel to this fund, there is also the vertical one, which is the extra money the State contributes to bring all communities even closer after the horizontal equalization, with the objective of reducing by up to 2/3 the distance of the basic tax capacity of the communities with respect to the one that has the most, which is the Community of Madrid. To curb it, since it also benefits from the capital effect, anti-dumping fiscal measures are also being studied to prevent it from engaging in unfair competition with the rest by lowering taxes.
• One of the battles of the Generalitat and ERC was that the principle of ordinality should be maintained, that is to say, that if Catalonia is third in contributing to the common basket of resources, after the application of the system it would not remain in lower positions. The new system does not explicitly incorporate the principle, but it does defend a "coherent relative position" of the communities with the highest fiscal capacity and that the leveling mechanisms function without "penalizing the generation of resources".
• Immediate deliveries: the draft includes another important novelty: the possibility for communities that wish to receive income immediately as it is collected. According to the explanation, those who joined would receive the collected money as it was deposited into the Bank of Spain. An income that would still have to be developed by regulation and would be less than fifteen days. The rest could continue with the current model, with advances throughout the year.

The possibility of collection by the Generalitat

What still remains up in the air from the agreement reached by Esquerra and the PSC for the investiture of Salvador Illa is the capacity to directly collect taxes by the Catalan Tax Agency. This is not incorporated into the financing system, and in fact, the Ministry of Finance has always closed the door to this possibility ever happening. The republicans hope to be able to introduce this possibility when the proposal for the new financing model reaches Congress.