Stitch by stitch, an outline of the agreement between the PSC and ERC that allowed the investiture of Salvador Illa. Until now it was known that the Government had committed to give up all taxes —except the local ones— to the Generalitat, starting with the Personal income tax in 2025. And although Moncloa guarantees that it will comply with this transfer in a timely manner, government sources They doubt that the rest of the taxes can be executed before the end of the current legislature, which leaves much of this agreement up in the air.
One of the reasons given by the Executive has to do with the capacity of the Generalitat – now with the socialist Salvador Illa in front—of assume such an amount of taxes in such a short time. But this legislature also focuses on its own parliamentary capacity, since the transfer of taxes requires a legislative reform that would have to be endorsed by the Congress of Deputies. “Many laws must be reformed,” warn sources from the Ministry of Finance.
Specifically, for Catalonia to begin managing personal income tax, it would have to modify the financing law of the autonomous communities (LOFCA), in addition to framing that agreement in a law on transfer of taxes to Catalonia. To modify the LOFCA, an absolute majority of Congress is needed, a step in which the Executive may stumble, which lately is working hard to gather the support of all its partners, especially Junts.
The post-convergents do not want to advance their position in this matter until a proposal reaches the Congress of Deputies, although they look with “concern” at the pact signed between the PSC and ERC, which in their opinion has nothing to do with a Basque or Navarrese-style quota. As for the rest of the formations that usually support the Government, there are also reluctance regarding the transfer of taxes to a single autonomous community. In fact, when the pre-agreement was signed, several groups integrated into Sumar, such as Más Madrid or CompromÃs, or groups such as Chunta Aragonesista showed their distrust in this regard.
No date for the rest of the taxes
For this reason, the Government insists that the first step is the transfer of personal income tax in 2025, which is already complicated. For the rest of the taxes they want to make it clear that “There is no date” nor is there expected to be one in the short term. They assure that the time horizon can go beyond the end of the legislature. And the truth is that in the text they only refer to the date of implementation of personal income tax, without giving more details about the rest of the taxes.
For the rest the only thing there is “vocation” and an agreementaffirm the same sources from the Executive, who highly doubt that the Generalitat can assume the transfer of all taxes before 2027. In addition, the agreement also includes that the Government makes a contribution to the State’s finances through a “percentage ” -without specifying- of participation in taxes and also a “contribution to solidarity” for public services in the rest of the territories.
Currently, the Generalitat only has transferred 50% of personal income taxwhich in 2025 would become 100%, in addition to 50% of VAT, and 58% of special taxes, such as gasoline, tobacco, alcohol or plane tickets. If the Government complies with the agreement, even if it is long-term, it would manage all of these taxes along with others that the State now controls. All except those of a “local nature”, which the agreement between PSC and ERC makes clear that will remain in the hands of the City Councilsas is the case of the real estate tax, known as IBI.
