Just the day after signing the decree dissolving Parliament and calling for elections, President Aragonès yesterday formally asked the Central Government for a unique regional funding system for Catalonia similar to that of the Basque concert, but with the difference which introduces an undetermined amount for solidarity with the rest of the communities through a “territorial rebalancing fund”. This proposal – which recalls Artur Mas’s failed fiscal pact – consists in broad strokes that the Generalitat will collect 100% of taxes with a potential income of 52,000 million, double what it is now.
Once the Catalan Administration has all the money, it will make two transfers: one for the payment of State services in Catalonia and another for the solidarity fund with the rest of Spain. Until now the Generalitat collects around 9% of the taxes paid in Catalonia, but with the new proposal it would become 100%. With data from 2021 (the last liquidated year), the revenue collected was 25,616 million, around half of the proposal for the new model.
“What we are proposing is a paradigm shift”, said yesterday the Minister of Economy, Natàlia Mas, at the presentation in a press conference after the Executive Council of the proposed 85-page financing system that will be sent to the Go- central vern Today Pere Aragonès is scheduled to explain the model at an informative breakfast in Madrid.
But he pointed out that the big difference between the proposal defined by the Generalitat and the Basque concert or quota is that the Basque model practically does not include any funds for territorial rebalancing with other autonomies. “In the Basque model, the contribution to other communities is almost non-existent”, he pointed out.
What the minister presented yesterday are the main lines of the project, but there is no figure on what the final result may be for the coffers of the Generalitat, since it will depend on the political negotiation. But he declined to make any estimate of how much the transfer to the State should be for the central government’s own expenses, such as “defense policies or the administration of justice”. The eternal debate on whether Catalonia should contribute to the maintenance of the Museu del Prado in Madrid (as a large state art gallery) or of the infrastructures of the Mediterranean corridor (which are not in Catalonia) remains open. With the new model, what the Generalitat does want is to reduce the fiscal deficit, which on average is equivalent to 8% of GDP, according to data from the Government itself. Mas said that the “fiscal deficit is disproportionate and persistent”.
In an interview, Minister Mas a few months ago defended a solidarity equivalent to 2% or 4% of GDP taking into account what is happening in other countries. Yesterday he gave the example of 3% of the GDP of some regions of Canada.
There is also no quantification of the proposed contribution to the rest of the communities. “They are metrics subject to political negotiation”, he added. It is not even clear which communities could benefit from these contributions from Catalonia. The Generalitat only talks about helping “autonomous communities with less economic capacity”. But, on the other hand, today the autonomy with the worst treatment in the regional tax system is Valencia.
The proposed model leaves out Social Security, which would continue to be centrally managed and collected. Catalonia has a Social Security deficit and receives more than it contributes. In this model, the Generalitat would indeed contribute to the state fund which then distributes money to the communities to pay the pensions.
The minister assured that the proposal is viable within the Spanish constitutional order and added that the Institute of Self-Government Studies has drawn up a report that guarantees its legality. Mas pointed out that the proposal they present today is similar and homologable to the one in other autonomous communities, such as the regional and Canary Islands, and in other countries, such as Germany and Canada.
With regard to the collection of the corporate tax that is now paid to the Central State, sources from the Ministry of Economy explained that the fact that in 2017 Catalonia lost the social headquarters of the main companies of the community The same sources said that different metrics would be used, such as the number of workers the companies have in Catalonia, to determine what part of the corporation tax would correspond to the community.
