The strong tension that was expected at the meeting of the Fiscal and Financial Policy Council (CPFF) that this Friday brings together the Treasury and the autonomous communities has been brought forward several hours. Early in the afternoon this Thursday, Madrid surprisingly announced that it will not attend the meeting in which the new regional financing model designed by the Executive and which the vast majority of the territories - all except Catalonia and the Canary Islands - reject. The community chaired by Isabel Díaz Ayuso also made a call to the rest of the PP's autonomies with the aim of also calling on the Treasury and boycotting a meeting that, without the necessary assistance, would be doomed to failure because it requires the presence of half of the territories. However, everything indicates that Madrid will be left alone: no one has yet announced their intention to support the sit-in.
The Internal Regime regulations of the Fiscal and Financial Policy Council of the Autonomous Communities, published in the Official State Gazette, are clear. It establishes that “for the valid constitution of the Council, the attendance of at least half of its members will be necessary.” A massive veto by the main opposition party, which governs the vast majority of the autonomies, would force the Treasury to suspend the meeting. Several PP communities consulted, such as Murcia, Andalusia, Extremadura or the Balearic Islands, assure that they plan to attend the meeting. The meeting also appears on the public agenda of La Rioja. Others affirm that the announcement has caught them by surprise and that they maintain their plan to attend the call. Nor would it be the first time that the discordant positions of the Díaz Ayuso Government in multilateral meetings cause discomfort in the rest of the PP communities.
Madrid, according to sources from the regional Government, has shown its position within the internal meetings that it has held in recent days with the national leadership of the Popular Party and the rest of the PP's Economy and Finance Ministers. And he has stressed that the only way that the new model cannot materialize in the CPFF is if there is no quorum at the meeting. “The absence of all the autonomous communities governed by the PP would mean the paralysis of this rupture of the equality of all Spaniards and the whitewashing of the economic and political corruption of the managers of the Generalitat of Catalonia in recent decades,” they add.
Treasury sources regret the announcement by the Community of Madrid and consider the call for a boycott “irresponsible.” In recent months, the Arcadi Spain department has accelerated the reform of the regional financing system with the aim of the proposal reaching the CPFF this Friday, after the procedures that were planned were postponed during the summer. The body was going to meet at the end of July, but the communities governed by the PP sent a letter to the ministry requesting to postpone the meeting after the holidays, alleging that they had not had enough time to study the proposal in depth, demanding more information and also underlining that the call took place in the midst of the fires that were ravaging the country.
The ministry agreed to delay the appointment until September, while now ensuring that during this time it was in contact with the regional ministries and sent them more details. “Institutional hooliganism will not prevent the Government from continuing to reach out to all territories and parliamentary groups to carry out a reform of regional financing,” say Treasury sources. They also remember that the initiative has to go through the CPFF but “it is ultimately debated and voted on in the Congress of Deputies, where national sovereignty resides.”
The Government remains determined to approve the new financing system despite the rejection it arouses among practically all communities, both those governed by the PP, some with socialist presidents, such as Castilla-La Mancha and Asturias.
Only Catalonia has seen the plan favorably from the beginning, which draws on a previous agreement between the PSC and ERC that served as a starting point to design the reform. In July, the Canary Islands also joined the bandwagon, where the PP governs as a minority party with the Canary Coalition, after extracting several technical concessions from the Treasury. The rest of the territories criticize it for having initially negotiated bilaterally with Catalonia, in addition to defending the economic interests of the Generalitat, as they denounce.
The Executive has no problems in moving forward with the proposal in the coordination body between the State and the autonomies, since it is enough for one of them, in addition to the Treasury, to vote in favor. And for now the votes of Catalonia and the Canary Islands seem guaranteed. But for this it is necessary that at least half of the territories attend the meeting, and that is the crack that Madrid has found to blow up the Treasury's plans.
The proposal
The Executive wants to channel a reform that has been pending since 2014 and that aims to replace the financing system with another that, in essence, maintains the current architecture, but incorporates more resources, greater regional participation in taxes and new mechanisms to reduce financing differences between territories.
The main novelty is the increase in resources. The new model would contribute an additional 21,000 million euros to the communities in its first year of operation, scheduled for 2027. Andalusia would receive an additional 4,846 million, Catalonia 4,686 million, the Valencian Community 3,669 million and Madrid 2,555 million, according to the calculations presented by the Treasury.
The increase in financing would be accompanied by a greater transfer of taxes. The communities would begin to participate in 55% of personal income tax, compared to the current 50%, and in 56.5% of VAT, also compared to 50%. The percentage of transfer of special taxes would remain at 58%. In addition, 100% of the collection of various taxes would be incorporated into the system, including the wealth tax, the tax on bank deposits, the tax on gambling activities and the tax on waste. The objective is for the autonomies to have more of their own resources and for the system to depend to a lesser extent on state transfers.
The reform also modifies the way of calculating the so-called adjusted population, the variable that determines a good part of the distribution of resources. The Treasury proposes introducing new criteria to better reflect the cost of providing public services and better address realities such as dispersion, orography, insularity or the amount of the aging or school-age population.
