From Centralization to Decentralization: Catalonia’s Journey towards Financial Sustainability

The allocation of welfare funds

The distribution of tasks has been shifted from a centralized state to a federal model, where regional governments have control over 24% of the income compared to 26% in the United States and 40% in Germany. This change has led to improvements in financing the welfare state, but it also presents financial challenges for autonomous communities.

Over-indebtedness is a significant issue affecting these communities due to the lack of resources due to financial deficiencies. This has contributed to Catalonia’s discontent, with the crisis worsening under PP governments. However, improvements were seen with the coalition government’s approach of pardons, amnesties, and dialogue.

To address these financial challenges, Catalonia has proposed a Unique financing model that aims to collect and legislate all taxes while contributing to a territorial rebalancing fund to support communities with less fiscal capacity. The focus is on increasing tax autonomy, fiscal responsibility, financial sufficiency, and transparency while upholding principles of loyalty and solidarity. The Minister of Economy should advocate for this proposal to ensure consistency and fairness in the fiscal system.

It is important to consider values and principles when making financial decisions rather than solely focusing on fiscal balances. Learning from positive international experiences and reaching agreements over time is more effective than fixating on immediate figures. By studying successful models and prioritizing cooperation, progress can be made in the realm of financial policy and regional development.

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