The Catalan Government has approved this Tuesday the spending ceiling with which it will prepare the Generalitat Budgets. It will be 37,783 million euros, a figure that is 12.8% higher than the last approved accounts (2023), but only 2.9% higher than the spending ceiling proposed by the previous ERC Executive, chaired by Pere Aragonès, to prepare this year’s budgets, which were finally withdrawn. The difference is 1,099 million, which will be the credit available to implement new measures and negotiate investments during the budget negotiation process.
“The approval of the spending ceiling indicates that the starting shot is now being fired for the budgets, which we want to have approved by January 1, 2025,” said the spokesperson for the Government, Sílvia Paneque, on Tuesday after the weekly meeting of the Government. “We are very aware that this Government has to gain the trust of ERC and the Comuns,” she admitted. The Catalan Executive is trying to seduce its partners to achieve the approval of the accounts before the end of the year, without neglecting the commitments made before the investiture. A different speed for each issue. Regarding the reform of the financing system, Paneque said that “no one escapes that it is a structural area that will require weeks and months of negotiation,” she predicted. Asked several times about what negotiating schedule the Government has set, the spokesperson pointed out that “the priority is the budgets, this does not mean that negotiations are not taking place in parallel on the financing model.” The PSC-ERC investiture pact establishes that by mid-2025 there will be a scheduled roadmap and that in 2026 the Generalitat will be in charge of income tax.
The approval of the spending ceiling is an essential step in starting the preparation of the budget. This figure basically comes from the forecast of revenue from taxes and fees, the debt to cover the deficit (which is set at a maximum of 0.1% of GDP, 307 million) and the accounting adjustments of the European regulations. The expected improvement is basically due to the improvement in economic activity. It must be taken into account that this figure will be compromised in part by the increase in the cost of the interest rates that must be paid for the almost 86,000 million euros that the Generalitat has in debt and by the evolution of the salaries of the Generalitat employees, among other issues.
The government has a headache in negotiating the budget, since its potential partner, Esquerra Republicana, has already warned that before lending its support to the accounts it will ask for tangible progress in the redesign of the regional financing model. In this matter, the order of the factors does alter the product. Esquerra warns that “delaying individual financing is delaying the budgets”, but the PSC is trying to strike a balance. The spokesperson for the Government stated on Monday that the priority was to approve the budgets and then get down to the new Catalan financing model. These statements did not sit well with Esquerra and were later tried to be qualified by Lluïsa Moret, spokesperson for the Catalan socialists. She assured that the PSC intends to address the two negotiations “in parallel”.
The agreement between PSC and ERC to modify Catalan financing is announced as the guiding thread of the legislature in Catalonia. Esquerra, which is experiencing a bitter process of internal division due to the redefinition of its leadership, maintains that the agreement on financing was decisive in facilitating its support for the investiture of Salvador Illa. Failure to comply now, say the Republicans, would mean breaking the rules of the game with the game already started. president Illa has imposed a maxim on his Government: little noise. One of his closest collaborators, the counselor of the Presidency Albert Dalmau, has announced that the Executive will apply the maximum demands to enforce the agreements reached by the PSC with ERC and the Comuns, to whom he has asked to trust him because he likes to speak with facts, he said on Monday in the Parliament.
In addition to the distribution of money between ministries and marking out the socialist roadmap for its mandate with public resources, along with the Budgets the Generalitat intends to approve the Law of Financial Measures. In it, it plans to introduce fiscal modifications such as a reduction in income tax (IRPF) for those earning less than 35,000 euros, or tax changes in tourism (for accommodation) and an increase in the tax on gambling, as demanded by ERC and Catalunya en Comú to try to stop the implementation of the Hard Rock macro-casino in Tarragona.
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