This pact includes an agreement that will take Catalonia out of the current common regime of regional financing and will cede 100% management of taxes to the Catalonia government.
PSOE say that this arrangement will not be the same as the one that applies to the Basque Country and Navarre, but it has the appearance of being similar.
For historical reasons dating back to the nineteenth century, the Basque Country and Navarre are excluded from the common regime. They operate according to the so-called foral system. Without going into great detail, what this means in essence is that these two regions collect and manage national taxes and make contributions to the state. Taxes raised in the other 15 regions go directly to the government in Madrid and are then redistributed. Under the foral system, per capita finance is greater than that under the common regime.
The deal in Catalonia will retain what is referred to as a solidarity quota, the payment by wealthier regions to the less wealthy regions. But regardless of this, the plan for Catalonia is not looked upon with favour in the Balearics, which next year will provide 448.5 million euros of solidarity funds, an increase of 61% over the current year. This will be the second highest ever contribution.
When it comes to the regional financing itself, the Balearics can expect 4,004 million euros in 2025, 22 million more than in 2024. Because the solidarity contribution is going up by as much as it is, the redistribution to the Balearics is lower than it might otherwise have been.
The formula for arriving at the current financing system expired in 2014. Reforming it has proved to be impossible because the regions and political parties can't agree on reform. As part of the reform debate, some advocate an end to the foral system, given that it does bring benefits. However, there are those who wish it to be extended across the board, as it would imply a federal system. It is therefore bound up in the wider debate regarding the regions' relationship with the state.
While there have been improvements to the amounts received by the Balearics, so there have also been increases to the Balearic solidarity payments to other regions. Since the model expired in 2014, the Balearics have handed over 4,254 million euros, a figure that is above that which the Balearic government will receive from Madrid in 2025.
The Partido Popular government of Marga Prohens is in any event demanding a more equitable financing system and it has made clear its opposition to the Catalonia deal. But there are voices insisting that she ceases to make this a fight against Catalonia and just stands up for Balearic interests. Tolo Gili, president of the regionalist El Pi party, argues: "All the autonomous regions should have their own financing system, like the one Catalonia is asking for or like the one the Basque Country has. It is incomprehensible that the islands are one of the regions that contribute the most to the state and from which it receives the least."
A massive bone of contention for the Balearics for years is about to become even more massive.
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Cat FisherBoth.
Zoltan TeglasIs this available money coming from the Spanish state or the EU ?
Seems to me, as a Spanish resident and tax payer, that the whole system needs a complete overhaul from top to bottom. It’s mind numbingly over complicated and inefficient. And this article exemplifies it clearly. If Spain really wants to address issues such as over-dependence on tourism then significant changes need to be made throughout Govt departments to allow more entrepreneurial enterprises to flourish. Unfortunately it always seems to be short term knee-jerk, poke the opposition in the eye decisions, which ultimately just compound the situation. I’m not holding my breath with this new lot in power either. Plus ça change…
People were asking the same question about left wing President Armengol. So, after 8 years, they decided not much so they kicked her out.
Rather than trying to score points with her right wing party, Prohens should be asking for finance for new train lines, especially as this money is available. In fact what has she actually been doing since she got into power? Has she been on holiday all this time?
There are many towns ,cities and region's in Spain that need help but until the likes of Andalusia get their act together being flippant with their administration and civil servant employment, what was explained will only get worse.
tranq tranquerWith all due respect, and a huge one for Mr Ede, all this information is available in the national and local press, and even more so on independent vlogs on YouTube. In Spanish of course, which will be no problem for you after having lived there for, I think, around 50 years. What Mr Gili doesn’t mention is that the Basque Country pensions, as well as could be likely the Catalan ones, will have to be paid by the State, as the local pension kitties are hugely overdrawn and basically bankrupt. So it all boils down to give US the good stuff, the bad stuff will have to be paid by YOU, the Spanish tax payer, wherever he is, or paid out of national debt, which the Basques and Catalans want nothing to do with. Bon día
Well done Andrew. That is what MDB needs, good straightforward explanations of how government works and the stance of various political parties. Less celebrity fob and more political fact.