Has the Catalan Government’s new funding model expired?

Maite Vilalta's picture
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The Catalan Statute of Autonomy designs a model that matches two principles: fiscal autonomy and equity. It foresees that the Catalan Government has the capacity to decide on the largest part of its revenues (autonomy) and defines an equity criterion that must enable calculating what it gives to the rest of the autonomous governments in the concept of solidarity.

These are the pillars of the new model designed by the Catalan Statute. And these are the pillars that support the model agreed on a bit more than a year ago (in July of 2009), which was then generalised for the rest of the common regime autonomous communities (all except for the Basque Country and Navarra). It is a model that respects the Catalan Statute, corrects the predecessor model’s main problems, and has a clear, federally inspired structure.

Nevertheless, there is an aspect that cannot be forgotten. Having a good model is just as important as having game rules and institutions that make it function properly. And this is the main problem we have. The machinery is good, but the environment where it works is still not well defined. When there is competence and revenue distribution among different governments, conflicts must be institutionalised, pacts must be reached, and obviously, what has been agreed on must be followed. Problems and solutions must be federated. The new model’s negotiation has pointed out, more than ever before, that we can move forward towards a “federal-type” model. However, without attitudes and institutions of federal character, it is difficult to implement the new model in its entire dimension, which hurts the economy, among other things, as it generates confrontation, uncertainty and instability. 

Once we have reached this point, it seems that the disjunctive is either to invent a new model (similar to the Basque economic agreement!) or demand what has been agreed on. Looking at how events have developed, the temptations to move towards the Basque economic agreement’s model are large. But we should not fool ourselves; what really attracts us to the Basque economic agreement are the results. And they depend on the calculation of the block grant; in other words, the amount of money that the Basque Country transfers to the State to fund the charges that the State assumes in Basque territory. Depending on how this sum is calculated, the results may be very different, and we may even lose money.

The current model’s main walls are solid. Maybe what is needed is to build a roof that fits and not consider the model out of date too soon. This means building the federal character structures that are missing. It is not easy at all, but it is a road map that other countries with modern and advanced economies have already followed. And the obtained results are good enough to take this way into account.

 

Maite Vilalta

Full-time professor of Public Treasury at the Universitat de Barcelona

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