Aragonès proposes that Catalonia collect all taxes and then transfer resources to the State

The Government of Pere Aragonès wants to control all the taxes paid in Catalonia. Manage and collect them and, later, transfer a part of the resources to the State, similar to the Basque concert but also including resources for a solidarity fund with “communities with less fiscal capacity.” That is the basis of the proposal for the new “singular financing” model for Catalonia that was presented this Tuesday by an Executive that is on the verge of the elections, called for May 12. The Minister of Economy of the Generalitat, Natàlia Mas, has assured that her approach is comparable to existing financing systems in federal countries, such as Switzerland or Canada, and that it is “reasonable and essential.” In addition to resembling the Basque model, it coincides with the fiscal pact that Artur Mas presented in 2012.

The Government has reacted with maximum caution in public, to avoid tension with an ally like ERC, but in private different members of the Executive make it clear that this Catalan-style agreement is not on the table and it is not feasible to negotiate on this basis. which furthermore, according to his vision, would even be constitutionally debatable because while the Basque Country has its fiscal specificity recognized in the Constitution, Catalonia is in the general regime. That is why the Executive maintains its offer, the same one that was negotiated for the investiture: a complete reform of regional financing in which any proposal from the independentists could be studied, but as long as it is within the framework of that reform that involves all the autonomies and not with a bilateral negotiation with Catalonia.

The Minister of Economy, Carlos Body, avoided a categorical rejection of the proposal, but made it clear that the framework is the multilateral negotiation of regional financing while the first vice president, María Jesús Montero, was somewhat more direct. Although, Montero avoided arguing with ERC. “The Government’s position is very clear: we are going to promote a reform of the financing system of all the communities of the common regime, including Catalonia,” said Montero. “But for this we need consensus, fundamentally with the PP.”

From the ranks of Junts, for his part, he has taken the opportunity to attack his former partners in the Government and send a warning to the central Government. The general secretary of the party, Jordi Turull, has avoided going into the details of the Government’s proposal, very similar to the one made by former president Artur Mas, but it has spoiled the moment in which it occurred. “This is an electoral pamphlet that discredits the institutions,” he criticized. ”If the PSOE believes that Junts will collaborate on coffee for all to strengthen it, they should forget about our votes, because this was not the spirit of the Brussels agreement,” Turull warned at an event in Mollerusa (Lleida).

A current collection of 9%

The heart of the matter, for the Generalitat, lies in the 52,000 million euros that Catalans pay in taxes. Currently, the Tax Agency of Catalonia (ATC) barely collects 9% and the rest of the tax resources that reach its coffers come from the regional financing model, in which, like the rest of the territories, it participates in a basket of taxes, in addition to have transferred taxes. The figure of 52,000 million is from 2021, when in the Budgets of the Generalitat, collection via taxes reached 30,000 million. The accounts are completed with other income, such as taxes or income from the exploitation of the assets of the Catalan Administration, which gives an idea of the increase in resources that the Generalitat could have.

What affects the most is what happens closest. So you don’t miss anything, subscribe.

This increase, however, would be limited by the two transfer routes contemplated in the Generalitat’s proposal, which leaves Social Security aside. The authors of the work, who also see clearly how it fits into the current legal system, have devised two ways to send money to Madrid. One would be similar to the Basque quota and the amount would be based on the investments and expenses that the State Administration makes in Catalonia. The second is the creation of an interterritorial fund, with which Catalonia would participate in solidarity. Both would be specified through political negotiation and in fact, their amount is the great secret that the Government maintains. It does not want to set any amount or any percentage with respect to GDP that could be understood as a red line or a weak point in possible negotiations.

The total amount of these two funds are “metrics that must be the subject of political negotiation,” the Minister of Economy has argued to refuse to quantify them. What the document prepared by the Generalitat does indicate is that the implementation of the model could be staggered, due to the complexity that the Catalan Treasury assumed the entire management. In addition, the transfer of human and economic resources from the Tax Agency is demanded, which would end up opening another case of thunder.

A few weeks ago, the bulk of the Catalan economic and business institutions had closed ranks on the need for an improvement in the finances of the Generalitat, with various proposals among which was the concert. Despite the similarities with the regional model of the Basque Country and Navarra, Mas has considered that the approach of an interterritorial solidarity fund is “almost insignificant” in the case of the system from which the Basque Country benefits. The Generalitat does not make any proposals regarding Social Security contributions.

Currently, the Generalitat, through the basket of transferred and shared taxes, and its own, manages more than 25,000 million, less than half of the 52,000 million in the proposal launched this Tuesday. The initial idea is that the final result of the transfer of resources in Catalonia is closed after negotiations between both administrations, as PSOE and ERC sealed during the negotiation of the last investiture of Pedro Sánchez. The proposal does not include percentages, although the Government has always affirmed the necessary reduction of what it considers the Catalan fiscal deficit, which it assures that each year it amounts to 22,000 million euros.

“Today we present a paradigm shift, a model that implies that Catalonia assumes the collection and management of all taxes,” Mas said at the press conference after the weekly meeting of the Catalan Executive. “The Spanish constitutional framework allows this proposal to be accommodated,” remarked the head of Economy, who has accepted that legislative changes are necessary, but that they depend only on “political will.”

In November, the president of the Generalitat commissioned Mas to prepare the proposal for a “fair and unique” model for Catalonia. With this, the Republican Executive sought to advance one of the party’s commitments for the investiture of Pedro Sánchez. The agreement that allowed the central government to be launched recognized that the financing of the Generalitat was outdated and, therefore, needed an update.

However, the Executive has always wanted to include a possible improvement within the global financing system of all the autonomous communities, which has not been updated for a decade. “The PSOE will support measures that allow financial autonomy and access to the Catalan market, as well as a unique dialogue on the impact of the current financing model,” said the agreement signed between ERC and PSOE.

Natàlia Mas has pointed out that the proposal is “reasonable and essential” and that it is based on “tax autonomy, financial sufficiency and fiscal solidarity.” Its presentation at the Palau de la Generalitat has been an amendment to the entire current regional financing system, in addition to criticizing the lack of “institutional loyalty” of the State with the autonomous communities, by ensuring that despite the fact that it has increased by 90% their income, the communities have barely earned half of the resources they managed.

The Government claims to face this negotiation bilaterally and will not undertake it in any multilateral forum. The document from the Executive of Pere Aragonès denies that it is “any privilege” of Catalonia and considers that it can be extended to the rest of the autonomous communities.

A proposal reminiscent of Artur Mas’ fiscal pact

The proposal designed by the Department of Economy after the commission made by President Pere Aragonès is very reminiscent of the one presented in 2012 by the former Catalan president, Artur Mas, to the former head of the Government, Mariano Rajoy. The so-called fiscal pact, which was voted by the Parliament, advocated that the management of all taxes fall on a then incipient Tax Agency of Catalonia, giving room to modify taxes according to the Catalan reality and included both payment for State services (in line with the Basque quota) as well as a solidarity quota with other autonomous communities. But, when defending the proposal in the Chamber, he then said that Catalonia contributed 8% of GDP more to the central government than it received and that his aspiration was to reduce that deficit by half. “Only with half of the fiscal pact, Catalonia would have a zero deficit and there would still be money left over to not be part of the adjustments,” he assured then, at a time when the Government had already launched large social cuts to meet the deficit. .