That all the focus is on the Iran war This doesn't make us forget the ongoing negotiations between the Catalan government and Esquerra Republicana (ERC) regarding the approval of this year's budget. We'll explain the current situation shortly. But first, a few points about the war.

On Friday, the Spanish Deputy Prime Minister publicly presented the proposal for a new financing model for the autonomous communities under the common regime. Outside of Catalonia, the proposal has sparked fierce opposition from the People's Party (PP) and the Socialist president of Castilla-La Mancha, both arguing that it not only excessively favors Catalonia but also represents a break with the system of solidarity that the State is meant to guarantee, and that this is because Prime Minister Sánchez has yielded to the blackmail of the Republican Left of Catalonia (ERC). Within Catalonia, many voices—including Junts per Catalunya and the employers' association Foment—denounce the proposal, adding that it falls short of the commitments made by the Spanish Socialist Workers' Party (PSOE) and the Catalan Socialist Party (PSC) in the investiture agreements. Who is right?

With the 4.7 billion euros that Catalonia is entitled to according to the agreement between Sánchez and Junqueras, Jordi Pujol would have taken the textbook "grab the money and run" approach. Pujol and most of the presidents who succeeded him would have done the same. And since the agreement also includes respect for the principle of ordinality and the end of advance payments, it wouldn't be a matter of wearing leather jackets.

The news of the day is the meeting between the Spanish president, Sánchez, and the leader of Esquerra, Junqueras.

After more than a year of negotiations between ERC and the PSOE (with the PSC caught in the middle), the moment of truth is approaching regarding Catalonia's special funding arrangements. This January, the Minister of Finance, María Jesús Montero, is scheduled to publish her proposed distribution of funds, an exercise that hasn't been undertaken in Spain since the last funding system was approved in 2009. The issue of personal income tax revenue will be addressed later, given that the current Catalan tax system is already underfunded. However, Montero must present figures, and the one of greatest interest in Catalonia is how much additional money the Generalitat (Catalan government) will receive to finance its responsibilities. But it will also be necessary to see how the other regions fare, especially the Community of Madrid, which benefits from the capital city effect and engages in highly unfair tax dumping compared to the rest of the country, as well as Andalusia, the most populous autonomous community.

The Generalitat-State Bilateral Commission held this Monday in Barcelona was supposed to serve to formalize the Spanish government's endorsement of the investiture agreement for Salvador Illa signed a year ago between the ERC (Republican Workers' Party) and the PSC (Spanish Socialist Workers' Party). That agreement had two main pillars: on the one hand, the commitment that the Catalan Tax Agency (ATC) must eventually collect all taxes, starting with personal income tax in 2026, and on the other, a new financing system for all autonomous communities that respects the criterion of ordinality. Well, in the end, neither one nor the other is taken for granted in the agreement signed between the two governments.

This Monday saw the launch of the unique financing project championed by the ERC (Republican Workers' Party) and accepted by the PSOE (Spanish Socialist Workers' Party) within the framework of Salvador Illa's investiture as president of the Generalitat (Catalan Government). The text agreed upon and signed by both parties is full of good intentions, always qualified by the call for the extensibility of the agreement to other regional tax administrations. The objective is for the tax administration of the Generalitat to progressively assume responsibility for managing personal income tax and for personal income tax returns for the 2025 fiscal year to be submitted to the Catalan Tax Agency (ATC), with the possibility of using the digital identification key established by the Generalitat (idCAT), and for the AEAT to be able to make progress, particularly with the verification of the correct application of regional regulations and, in particular, of the deductions approved by Parliament."

Exactly 16 years ago, on July 12, 2009, the then-Secretary General of the ERC (Republican Revolutionary Party), Joan Puigcercós, appeared before the press to announce his support for the financing agreement reached by Minister Antoni Castells and Vice President Elena Salgado. Puigcercós placed a small sign on the lectern with a figure: 3.855 billion euros, which was the estimated additional contribution the new system would make to the coffers of the Generalitat (Catalan Government). The subsequent economic crisis, and the resulting drop in tax revenue, effectively dashed these predictions.

The battle over the financing opened up following the agreement between the ERC and the PSC (Spanish Socialist Workers' Party) to invest Salvador Illa is being played out on two parallel fronts: the first is tax collection, which focuses on ensuring that the Catalan Tax Agency manages all taxes, but starting with the most important, which is personal income tax. The second front is the distribution of resources, on which it has been established that there must be a solidarity quota, but with the limit of the ordinality criterion. In this Monday's Bilateral Commission, the Spanish government will adopt the bases of the ERC-PSC agreement, which until now had the endorsement of the PSOE (Spanish Socialist Workers' Party), but not its signature, nor was it included in any official document.