A reform that rewards Catalonia: it would earn 92 euros per inhabitant, despite already receiving 93 more than Madrid

A proposed reform would reward Catalonia with an additional 92 euros per inhabitant, despite the community already receiving 93 euros more than residents of Madrid. The reform, outlined by the Ministry of Finance in January 2026, aims to adjust the autonomous financing system, which currently provides Catalonia with 3,456 euros per capita adjusted, 1.9 percent higher than the national average and 93 euros more than what each citizen in the Community of Madrid receives. This discrepancy results in an annual financial gap of approximately 719 million euros in favor of Catalonia, which could widen further if the reform is implemented. The reform would see Catalonia gain 92 euros per person while Madrid would lose 97 euros. Other regions such as Galicia, Asturias, and Castilla y León would also experience net losses. Contrary to claims that all communities benefit, the proposal appears to advantage Catalonia significantly. According to a report titled Madrid vs. Catalonia: the myth of under-financing and the real problem of spending, published by the Center Ruth Richardson at the University of the Alborán, the reform would deepen existing disparities and reinforce perceptions of arbitrariness within the system. The study suggests that the main challenge in fiscal policy lies not in funding itself, but in the structure of public expenditure. Catalonia's current per capita allocation stands at 3,456 euros after accounting for all financial instruments, compared to 3,363 euros for Madrid residents. Both Catalonia and Madrid, along with the Balearic Islands, are among the few regions that contribute more to the common fund than they receive, making them collectively more supportive of other communities. Calculations based on their tax revenue capacity reveal that Catalonia effectively loses 7.8 percent of its homogeneous tax income, approximately 2.266 billion euros, while Madrid contributes 26.3 percent of its theoretical tax collection, around 7.975 billion euros. Although Madrid’s actual tax revenue is lower due to its economic policies focused on reducing taxes, its contribution to the system remains independent of these decisions. As a result, Madrid ends up with slightly less funding than the national average, whereas Catalonia clearly exceeds it. Santiago Calvo, author of the study, explains that the reform would exacerbate this imbalance. He notes that Madrid, being the most contributive region, pays 26.3 percent of its potential tax revenue yet ends up below the national average. If the reform maintains the principle of ordinality, as previously stated by former ministers, it contradicts Madrid’s situation. Under the new model, Catalonia will particularly benefit from adjustments related to small business value-added tax (IVA), which heavily favors the region. Catalonia’s reliance on state-subsidized financing has also been called into question. Its outstanding debt reached 89.069 billion euros by the end of the third quarter of 2025, representing 28.4 percent of its GDP, nearly three times that of Madrid, which stands at 11.5 percent. Of this debt, 85 percent consists of loans issued through the Autonomous Liquidity Fund and other liquidity mechanisms offering interest rates far below market levels, between 0% and 1.5% over the past decade. These low-interest loans have allowed Catalonia to maintain its financial stability despite its high debt burden.