PSOE and ERC negotiate the capacity of the Catalan treasury

With three days remaining until the bilateral meeting between the Catalan government and the Catalan government, which is expected to begin laying the foundations for the new single financing model and advance tax collection by the Catalan Tax Agency (ATC), the agreement with the Republican Left (ERC) is still pending. There are some stumbling blocks in the negotiations, and what happens in the three days leading up to the meeting between the Catalan and Spanish governments will be decisive.

Although the climate is not one of unrest, there are disagreements regarding the capacities that the Catalan Tax Agency should have. To handle the collection of various taxes—the first being personal income tax for 2026—this agency will need to be strengthened both from a personnel and material perspective, but also from a regulatory perspective. The current picture shows that the Republicans are demanding a larger resizing of the ATC than the Socialists are considering.

They agree on promoting legislative changes for the new model, but the wording is not finalized.

ERC maintains that this demand would contribute to maintaining the state tax agency's control over the Catalan tax system, a point the pro-independence party frowns upon. The point is that, beyond tax collection, Oriol Junqueras's party also views tax management as fundamental, in line with what was agreed upon for Salvador Illa's investiture. Therefore, the ability to collect, assess, and inspect all taxes paid in Catalonia.

Despite the difficulties, negotiations continue and will continue until the very end. Therefore, both parties insist on downplaying the obstacles that have arisen regarding the deployment of the ATC and emphasize the significance of a political agreement that will pave the way for regional financing, linked to strengthening the fiscal autonomy of the territories—since the model will be exportable to the rest of the autonomous regions—and to the basic principles pre-established in the pact with the ERC: the necessary solidarity limited by ordinality.

The expectation is that what emerges on Monday will allow progress to be made in the progressive management of the entire tax system by the Catalan Tax Agency, but this will require strengthening the functions of the ATC. The acid test will be the 2026 tax return, which will require a series of legislative amendments to enable this. With these regulatory changes, the ERC hopes to protect the new Catalan financing model against potential changes in government.

In this regard, the PSOE and ERC agree on the need to push through Congress a bill that would allow the transfer of taxes to Catalonia, although this initiative has yet to find a consensus.

In fact, it's worth noting that the agreement between the PSC and the Republicans aims to modify the LOFCA (Organic Law on the Financing of Autonomous Communities), the law on the transfer of taxes, and the law on the transfer of taxes to implement the new financing model.

Furthermore, the agreement alludes to a "scheduled rollout" of the new financing model, an area in which the ERC is also seeking specificity. However, precise time commitments are unlikely to emerge from Monday's bilateral meeting.