The unique financing system model for Catalonia that the team of the Minister of Economy, Natàlia Mas, is going to develop, could increase the State resources that reach Catalonia by between 24% and 33% per year. This calculation arises from the estimate made by the councilor in an interview with La Vanguardia about how much the contribution to Spain's solidarity could be: between 2% and 4% of GDP.
Currently, this percentage is close to 10% based on the calculations of fiscal balances and fiscal deficit prepared by the Generalitat for 2021. In reality, the fiscal deficit is nothing more than the subtraction between what Catalonia contributes to the State and what receives from this via investments, current expenses such as pensions or subsidies or resources from the financing model other than the part already transferred from taxes. Therefore, it could be understood that the fiscal deficit is Catalonia's contribution to the rest of the territories.
The problem is that the central government has stopped publishing fiscal balances, and the only thing there is is the estimate made by the Generalitat with the partial data it receives and only with one of the two calculation methods that exist. In 2021, for example, according to calculations by the Generalitat, Catalonia contributed 75,436 million to the State and received 53,454 million. That means that there was a 21,982 million deficit. It is money contributed by Catalonia that did not return via spending in the community. And that amount is equivalent to 9.6% of GDP. Therefore, if Mas believes that acceptable solidarity could be between the aforementioned 2% and 4% of GDP, that means that the extra money that would reach Catalonia would be between 12,800 and 17,400 million. The increase with respect to the resources received would be between 24% and 33% more. The percentage growth is almost identical if the 2019-2021 period is analyzed.
Although it is a very simple calculation and subject to many interpretations, what is certain is that the magnitude of potential growth gives an idea of the importance of negotiating a new system. The unique financing model that the Generalitat opts for is immensely more complex than going from an estimated deficit of 10% to one of 2% or 4%. The objective of the Generalitat is to substantially improve financing. Broadly speaking, Mas thinks of a system in which the Generalitat would collect all taxes and give the State an amount as solidarity. That amount is between 2% and 4% of GDP.
The current financing model provides that the communities of the common regime are financed with the transferred taxes (50% personal income tax and 50% VAT) plus their own. For the rest, they are distributed based on a financing model that tries to balance resources by community.
The IEB-UB professor and researcher, Maite Vilalta, remembers that the result of a fiscal balance (in the case of Catalonia, fiscal deficit) is explained by several things, among them, the financing model. In his opinion, a good financing model for the Generalitat is not only about contributing to reducing the fiscal deficit, but also about the degree of fulfillment of other objectives such as achieving a greater degree of fiscal autonomy, improving the calculation formula of the contribution to the leveling mechanism or ensuring compliance with institutional loyalty. “What is certain is that if a good financing model can be agreed upon (that achieves the aforementioned objectives), this will be reflected in a reduction in the current level of fiscal deficit. But it does not seem appropriate to evaluate the goodness of the model by the amount of this reduction. I don't know of any reference country that does it this way,” she says.
The director of the Chamber of Commerce's studies service, Joan Ramon Rovira, who has been analyzing the financing model for years, has calculated what a reasonable fiscal deficit could be for the community. It is evident that Catalonia cannot have a zero deficit because by being part of the group of the richest or most developed communities, it must contribute to improving the situation of the rest of the poorest autonomies. Rovira estimates that this deficit could be between 2% and 3% of GDP. These are percentages that are close to the estimate by Natàlia Mas citing what happens in federal systems in different parts of the world.
