Spain's Finance Minister Montero to Present New Catalonia Fiscal Model 'As Soon As Possible'

Montero Announces Imminent Presentation of New Catalan Fiscal Model

Spain's Finance Minister and First Deputy Prime Minister, María Jesús Montero, has announced her intention to present a new financing model for Catalonia 'as soon as possible.' The minister stated that this proposal fulfills 'commitments' agreed upon with Catalan political parties, particularly in exchange for their backing of Pedro Sánchez as Prime Minister and Salvador Illa as Catalan President. Montero made these remarks at the 'World in Progress' forum in Barcelona on October 20, 2025.

Background to the Proposed Fiscal Shift

The move follows a key meeting on July 14, 2025, between the Spanish and Catalan governments, which laid the groundwork for this new financial framework. This agreement, primarily between the Socialist Party of Catalonia (PSC) and the Republican Left of Catalonia (ERC), aims to address long-standing demands from Catalan nationalists for greater fiscal autonomy. Catalan separatists have consistently argued that the existing system penalizes the region and limits its fiscal sovereignty, advocating for a model similar to the special tax status enjoyed by the Basque Country and Navarre. The pact was a crucial condition for ERC's support in forming the current Catalan government.

Key Features of the 'Paradigm Shift'

The proposed model represents a 'paradigm shift' in Spain's financing system, moving from an expenditure-based approach to one centered on revenue generation by each autonomous community. Key aspects of the new model include:

• Direct Tax Collection: Catalonia will begin collecting personal income tax (IRPF) starting in January 2026. The ultimate goal is for the Catalan government to collect all its taxes directly.
• Revenue-Based System: The new framework will focus on revenues and shared responsibility, unlike the current model based on regional expenditure needs.
• Principle of Ordinality: The model will require Catalonia to respect the 'principle of ordinality,' ensuring that regions contributing more to the public treasury do not receive fewer resources per capita than those contributing less. ERC has emphasized this principle as 'non-negotiable.'
• Solidarity Contribution: From the collected revenues, Catalonia will make a payment to the Spanish state to cover central government spending and a 'solidarity contribution' to support communities with lower tax revenues.
• General Applicability: While tailored for Catalonia, the proposal is designed to be applicable to other autonomous communities that choose to implement it.

Implementing this new system will necessitate legal changes, including modifications to Spain's Organic Law on regional financing, requiring an absolute majority in the Congress of Deputies.

Political Reactions and Future Outlook

The announcement has generated significant debate. While Minister Montero asserts that the new system aims to 'deepen regional powers' and ensure 'equal opportunities for all regions,' it has faced strong opposition. Conservative parties, including the Popular Party (PP) and Vox, have criticized the measure as 'preferential treatment' or 'fiscal secessionism,' arguing it undermines the principle of solidarity among autonomous regions. Some Socialist members from other regions have also voiced concerns. Despite these challenges, the Spanish government and Catalan officials, including Catalan Presidency Minister Albert Dalmau, are committed to advancing the proposal, with the Fiscal and Financial Policy Council expected to discuss the spending plan in the coming days.