The unique financing system model for Catalonia that will be developed by the team of the Minister of Economy, Natàlia Mas, could increase the resources of the State that reach Catalonia by between 24% and 33% each year. The calculation comes from the estimate made by the minister in an interview with La Vanguardia about what the contribution to Spain’s solidarity could be: between 2 and 4% of GDP.
Currently, the percentage is close to 10% according to the fiscal balance and fiscal deficit calculations carried out by the Generalitat for 2021. In reality, the fiscal deficit is still the remainder between what Catalonia contributes to the State and what it receives through investments, current expenditure such as pensions or subsidies or resources from the financing model other than the already ceded part of taxes. Therefore, it could be understood that the fiscal deficit is Catalonia’s contribution to the rest of the territories.
The problem is that the central government has stopped publishing the fiscal balances and the only thing that exists is the estimate carried out by the Generalitat with the partial data it receives and with only one of the two calculation methods available. In 2021, for example, according to calculations by the Generalitat of Catalonia, it contributed 75,436 million to the State and received 53,454 million. This means that there was a deficit of 21,982 million. It is money that Catalonia contributed that did not return through spending to the community. And the amount is equivalent to 9.6% of GDP. Therefore, if Mas believes that an acceptable solidarity could be between the aforementioned 2% and 4% of GDP, this means that the extra money that would reach Catalonia would be between 12,800 and 17,400 million. The increase in terms of resources received would be between 24% and 33% more. The percentage growth is almost calculated if the period 2019-2021 is analyzed.
Although it is a very simple calculation and subject to many interpretations, what is certain is that the magnitude of the potential growth gives an idea of ??the importance of the negotiation of a new system. The unique financing model that the Generalitat is opting for is immensely more complex than going from an estimated deficit of 10% to one of 2 or 4%. The goal of the Generalitat is to substantially improve funding. Broadly speaking, Mas thinks of a system in which the Generalitat collects all the taxes and delivers an amount to the State as a form of solidarity. This amount is between 2 and 4% of GDP.
The current financing model foresees that the communities of the common regime are financed with the taxes transferred (50% personal income tax and 50% VAT) plus their own. For the rest, they are distributed based on a funding model that tries to balance resources by community.
The professor and researcher at the IEB-UB, Maite Vilalta, recalls that the result of a fiscal balance (in the case of Catalonia, fiscal deficit) can be explained by several things, including the financing model. In his opinion, a good financing model for the Generalitat does not depend only on contributing to reduce the fiscal deficit, which also, but on the degree of fulfillment of other objectives, such as achieving more fiscal autonomy, improving the calculation formula of the contribution to the leveling mechanism or to ensure compliance with institutional loyalty. “What is true is that, if it is possible to agree on a good financing model (that achieves the aforementioned objectives), it will be reflected in a reduction of the current level of fiscal deficit. But I don’t think it’s appropriate to judge the goodness of the model by the amount of the discount. I don’t know of any reference country that does it this way”, he says.
The director of the studies service of the Chamber of Commerce, Joan Ramon Rovira, who has been analyzing the financing model for years, has calculated what a reasonable fiscal deficit could be for the community. It is clear that Catalonia cannot have a zero deficit, because, as it is part of the group of the richest or most developed communities, it must contribute to improving the situation of the rest of the poorer autonomies. Rovira calculates that the deficit could be between 2% and 3% of GDP. These are percentages that come close to what Natàlia Mas estimated when she cited what happens in federal systems in different parts of the world.
