- The current system for financing non-homogeneous competencies presents serious inequalities and a lack of transparency in the allocation of funds.
- Catalonia is the most benefited community, while regions like Castile and León receive minimal amounts per inhabitant.
- The Government proposes replacing direct transfers with an additional transfer of up to 90% of the VAT collected in the territory.
- The reform seeks to expand Catalan fiscal autonomy, allowing the Catalan Tax Agency (ATC) to progressively manage taxes such as personal income tax (IRPF).
When we talk about how money is distributed among the autonomous communities, we usually think about the general distribution, but there is a much more complex and, at times, controversial system: the funding of specific responsibilities . Basically, these are public services that not all regions manage; only some have assumed responsibility for them. This creates a scenario where not all territories have a level playing field or receive the same resources.
This issue has recently come to the forefront because the current system suffers from serious inconsistencies and a lack of transparency , generating a sense of inequality among citizens depending on where they live. While some autonomous communities receive enormous sums to cover their specific needs, others receive almost nothing, leading to proposals for profound reforms to change how the central government distributes funds.
What exactly do non-homogeneous competencies consist of?
To put it simply, non-homogeneous powers are those significant functions that have been transferred to a specific autonomous community but have not been assumed by the other regions under the common regime. We are not talking about healthcare or basic education, but rather very specific areas that are part of administrative decentralization in Spain.
- Security and public order: The clearest example is the Mossos d'Esquadra in Catalonia, a local police force that comes at a very high cost.
- Prison management: Only Catalonia has been granted the management of prisons within the common regime.
- Justice: It refers to the material and human resources of the judicial administration, which, although widespread, were not assumed at the same time or at the same costs.
- Language policies: The funds allocated to the standardization and promotion of co-official languages.
- Natural environment: The conservation of national parks, whose management has been irregular and with very different financial costs depending on the area.
Fedea's analysis: a map of inequalities
The Foundation for Applied Economic Studies (Fedea) has hit the nail on the head by analyzing the 2023 data. According to its calculations, public spending on these areas is close to 8.319 billion euros , but the distribution is, to say the least, curious. Catalonia leads the list by a wide margin, receiving around 450 euros per inhabitant, while in Castile and León the figure plummets to nine euros per capita.
The problem lies in the use of a methodology based on historical cost . This means that the service is valued according to its past cost, resulting in two regions offering similar services receiving vastly different amounts. For example, in the administration of justice, Asturias received €81,8 per resident, while Galicia received only €35,5, a gap that is difficult to justify technically.
Another critical issue is the funding of religion teachers, where the discrepancies are even more egregious, exceeding 150 points on the index. Asturias again stands out with €88,7 per student, compared to the astonishing €20 that Catalonia receives for the same purpose.
The Government's new proposal and the Catalonia factor
Given this situation, the Ministry of Finance has proposed a reform that breaks with the traditional system. Until now, the State sent annual direct transfers that were adjusted according to tax revenues. Now, a voluntary mechanism is proposed that allows taxpayers to exchange that annual check for a larger share of VAT revenue.
This new model would allow autonomous communities to finance their unique characteristics through an additional transfer of VAT revenue , potentially reaching up to 90%. This represents a complete paradigm shift, as it moves money from the central government's general budget towards the territories' own tax collection, bringing Catalonia closer to its long-sought fiscal sovereignty.
The bilateral agreement between the Spanish Government and the Catalan Government aims to guarantee financial sufficiency and shared responsibility . This means that Catalonia will have greater regulatory power in tax management, allowing the Catalan Tax Agency to gradually assume responsibility for personal income tax and other taxes, working in conjunction with the State Tax Agency.
Territorial conflicts and steps to follow
As expected, this design has not been well received in the rest of Spain. Fourteen of the fifteen autonomous communities under the common regime have expressed their outright rejection , fearing that it will create an excessive privilege for Catalonia. The debate centers on whether this mechanism should be temporary or, as the current draft indicates, should be maintained indefinitely for the duration of the model.
The path for this to become law involves the Permanent Technical Evaluation Committee and the Fiscal and Financial Policy Council. Since the Government only needs the affirmative vote of one autonomous community to approve the proposal in the Council, the path seems clear, although it will require the support of coalition partners like Junts in the Spanish Parliament for final ratification.
The current situation reflects a constant tension between the need to address the particularities of each region and the demand for a system that is transparent and equitable for all citizens, preventing the management of public services from depending on bilateral political agreements that obscure real financial disparities.
