The debate on the new system of autonomic financing has reopened the confrontation between the central Government and the Balearic Government, after the Ministry of Finance proposed a model that would increase the resources received by the Balearic Islands by 412 million euros per year, but which has been flatly rejected by the autonomic Executive.
The proposal places the Balearic Islands above the state average in financing per adjusted inhabitant, according to the calculations transferred by the Spanish Government, although the Government maintains that the model does not correct the structural imbalances of the archipelago and puts its fiscal autonomy at risk.
More funding linked to adjusted population
The Government Delegation in the Balearic Islands argues that the new model introduces variables that specifically benefit the archipelago, such as insularity and the fixed costs derived from territorial fragmentation. These criteria correct the current system, in which the Balearic Islands is below the average in funding per inhabitant.
In addition, the Ministry’s approach incorporates the IVA Pymes mechanism, which recognizes the weight of small and medium-sized companies in the Balearic economy, as well as a new climate fund, endowed with around 1,000 million euros, of which the Balearic Islands would be one of the beneficiary communities.
The use of resources and the message to the Govern
The delegate of the Government in the Balearic Islands, Alfonso Rodríguez, has stressed that the increase in funding would allow the reinforcement of essential public services, such as housing, health or dependence. ” 412 million more per year are enough for many public policies”, he pointed out, recalling that the central government does not impose a specific destination for the funds, but trusts in the autonomous management.
Rodríguez warned that renouncing to take advantage of these resources would be detrimental to citizens, and asked the Govern not to automatically reject an improvement in funding, appealing to prioritize the interests of the Balearic Islands in the state debate.
Government’s outright rejection and judicial threat
The reaction of the Government has been immediate and forceful. The Minister of Economy, Finance and Innovation, Antoni Costa, has described the proposal as “horrendous” and has warned that the Balearic Executive will go to court if the new system forces to raise taxes in the community .
For the Govern, the possible imposition of limits to the so-called fiscal dumping is a red line, especially in relation to inheritance and gift tax. Costa has assured that the autonomic Executive does not negotiate concrete figures, but a model that defends the structural interests of the Balearic Islands.
Criticism of the negotiation and loss of weight of insularity
The Govern also questions the content and method of negotiation of the new model, considering that it does not incorporate key variables such as the floating population or demographic growth, while reducing the weight of insularity in the distribution.
In addition, the Balearic Executive has denounced the fact that the principle of ordinality is only applied to Catalonia, and has criticized the fact that the negotiation of the system has been linked to bilateral agreements, instead of being approached multilaterally among all the communities.
Prohens sets fiscal autonomy as a red line
The president of the Government, Marga Prohens, has reinforced the political rejection of the model by accusing the Spanish Government of “mistreating” the Balearic Islands with a proposal that, in her opinion, does not address any of the historical claims of the archipelago.
Prohens has placed fiscal autonomy as the main insurmountable limit of the Govern, warning that any attempt to recover eliminated taxes would contravene the will expressed by the citizens at the polls. The president has assured that the Balearic Executive will use all political and legal means at its disposal to defend the interests of the community.
The proposal for regional financing must now be debated in the Fiscal and Financial Policy Council, where the communities will be able to present their positions before the model reaches Congress. The confrontation between the Govern and the central government anticipates a complex negotiation, with taxation and the territorial distribution of resources at the core of the conflict.
