Regional financing reforms and the Catalan agreement
Catalan agreement
Fecha: noviembre 2024
Santiago Lago Peñas
SEFO, Spanish and International Economic & Financial Outlook, V. 13 N.º6 (November 2024)
The recent agreement reached between Catalonia’s Partit dels Socialistes de Catalunya (PSC) and Esquerra Republicana de Catalunya (ERC) marks a potential shift in Spain’s regional financing model, aiming to enhance Catalonia’s fiscal autonomy while minimizing interregional redistributive flows. Key proposals include transferring the administration of all taxes collected in Catalonia from the central government to the regional tier and establishing a “Catalan contribution” to offset reduced central taxation power. Financial projections indicate that Catalonia’s per capita financing would substantially rise. More broadly, however, the agreement could lead to structural changes in Spain’s decentralization framework, reducing central government fiscal capacity and potentially influencing other regions to pursue similar autonomy arrangements. While the agreement faces implementation challenges, including the need to reform basic legislation and address the risks of increased tax competition and fiscal fragmentation, it ultimately underscores the need for comprehensive debate on the future of Spain’s interregional equity and fiscal stability.