The Government overcame yesterday the first hurdle for Spain to have a new system of regional financing. The one currently in force dates back to 2009, when the country was very different, and therefore has been expired for 12 years. The Fiscal and Financial Policy Council approved the proposal of the model that had been devised by the Treasury and ERC and whose embryo is the investiture pact of Salvador Illa in Catalonia.
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But now an even more complex procedure remains, that of the Congress, where the Executive needs the support of Junts, with whom it wants to negotiate. The model incorporates 21 billion euros more resources for the autonomous communities but does not include the full transfer of the IRPF, a measure that the Treasury does not consider.
The Minister of Finance, Arcadi España, celebrated after the meeting with the regional ministers the approval of a proposal designed by María Jesús Montero and that now must be ratified by the Council of Ministers “in the coming weeks,” said España, to move on to the Congress of Deputies. “It is good for our country, for unity and for public services,” he defended. “Our obligation is to find a balance” in the distribution of resources, he added. He asked parliamentary groups to “put aside the noise and fury” so that – he wished – the new model could be in force on January 1, 2027.
Alícia Romero, Minister of Economy: “Catalonia’s satisfaction is absolute”
At the Fiscal and Financial Policy Council what was expected happened. The Treasury’s proposal received only the support of the ministers from Catalonia and the Canary Islands, governed by CC and co-governed by the PP. The Canary Islands’ Minister of Finance, who actually belongs to the PP, did not attend the meeting.
The Treasury holds half of the votes in the financial coordination body, so the approval of its approach was never in danger.
All the communities governed by the PP voted against the Government’s proposal. Despite the fact that the improvement in financing is widespread for all the autonomous communities. Thus Andalusia, Valencian Community, Galicia, Aragon, Balearic Islands, Extremadura, Castile and León, Cantabria, Murcia and La Rioja rejected it. Also Ceuta, with whom all those present at the meeting showed solidarity, and Melilla. Madrid, which had called to boycott the meeting, did not attend and its seat remained empty.
Junts proposes a total amendment because “there is no unique financing system”
The argument put forward by the popular-signature autonomous communities to reject the reform model is that it had been previously agreed with ERC and, therefore, “imposed” on the rest of the territories. The Treasury recalls that the PP had already reached significant economic agreements with Jordi Pujol’s CiU.
Castile-La Mancha and Asturias, governed by the PSOE, also voted against their own party’s approach. In total, the Government’s proposal was rejected by 87% of the territories.
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The Generalitat did not hide its joy yesterday at the milestone represented by the possibility of approving new financing. Alícia Romero, Minister of Economy and Finance of the Generalitat, stated after the meeting in Madrid that “Catalonia’s satisfaction is absolute to finally have a new system that we have so often demanded. A model,” she added, “that opens the door to improving public services with the additional contribution of almost 4.7 billion euros for Catalan finances.
The Treasury again rules out a full transfer of the IRPF: “We agree on network management”
Minister España criticized that autonomous communities such as the Valencian Community, where he was minister, or Murcia, which have an underfunding problem, voted against the agreement. The objective of the Treasury’s proposal was to break the unity in the PP communities, something that was not possible, at least in this forum.
España also denounced that some of the proposals his department had received from the PP communities would harm other territories and gave the example of an Andalusian approach to calculate the adjusted population (taking into account depopulation or aging) that would have harmed Castile and León.
Regional financing now needs the participation of Junts, whose position is to move towards an economic agreement between the State and Catalonia. España did not want to anticipate yesterday how his team will approach negotiations with parliamentary groups, but Carles Puigdemont’s party already warned yesterday that it will present a total amendment when the law reaches Parliament. Junts’ economic spokesperson in Congress, Josep Maria Cruset, warned that the model proposed by the Treasury “will certify that there is no unique financing system nor key to the cash box for Catalonia. There is a proposal of coffee for all as always.” Junts has participated in several important negotiations with the Treasury, such as the December 2024 fiscal package unlocked by Puigdemont and former president José Luis Rodríguez Zapatero. The relationship has worsened at this moment.
All PP ministers, Asturias and Castile-La Mancha voted against; Madrid did not attend
The Minister of Finance also ruled out yesterday negotiating a full transfer of the IRPF to Catalonia. “We agree on network management” of the tax, he defended, although he was open to negotiating the amendments that are presented.
The regional financing system still in force today was approved in 2009 with no votes against. Spain was very different then. The second vice president and Minister of Economy and Finance, Elena Salgado, was responsible for closing the agreement. The Catalan minister was then Antoni Castells. The Government obtained the support of the PSOE-governed communities at the Fiscal and Financial Policy Council, as well as Cantabria, then co-governed by PRC and PSOE, and the Canary Islands, by CC and PP. The communities then in the hands of the PP abstained by order of the party president and opposition leader, Mariano Rajoy. The system in force has been expired for twelve years.
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