The Balearic Government has voted against the new regional financing system presented by Spain’s Ministry of Finance. The Balearic executive considers that the proposal fails to address any of the islands’ main demands. These include giving greater weight to insularity, the floating population, population growth and the application of the principle of ordinality.
At the centre of the image, Regional Minister for Economy, Finance and Innovation Antoni Costa, before the Fiscal and Financial Policy Council meeting. Photo: CAIB.
The proposal was approved this Friday at the Fiscal and Financial Policy Council (CPFF) meeting held in Madrid, with votes in favour from the Spanish Government, Catalonia and the Canary Islands. First Vice-President and Regional Minister for Economy, Finance and Innovation Antoni Costa defended the Balearic Islands’ rejection “with complete conviction” and criticised the Ministry’s lack of negotiation.
“Not a single one of the Balearic Islands’ unanimous demands has been taken into account”, Costa said. The vice-president stated that these demands have for years enjoyed the consensus of parliamentary groups and different sectors of Balearic civil society.
Balearic Islands demand that financing takes insularity into account
One of the main reasons for the rejection is the treatment of insularity in the regional financing system. According to Costa, the proposal does not increase its weighting, but reduces it.
“If the additional costs associated with insularity were already not being compensated for, they will be compensated for even less if this financing system is approved”, he said.
The Balearic Government is also calling for the distribution of resources to take into account the strong population growth recorded on the islands. According to figures provided by Costa, the population of the Balearic Islands has increased by 50% over the past 20 years.
The regional government argues that this increase has a direct impact on the cost of public services such as healthcare, education and social services.
Floating population excluded from the new model
Another criticism from the Balearic Government is that the model does not take into account the Balearic Islands’ floating population. Costa pointed out that the islands receive millions of tourists and seasonal workers every year who also use public services and infrastructure.
The vice-president believes this reality should be incorporated into the calculation of the archipelago’s financing needs.
Another of the Balearic Islands’ demands concerns the principle of ordinality. Costa explained that the Balearic Islands is the region that contributes the second-highest amount of resources to the system, but ranks tenth after redistribution.
“We want to be second in contributions, but also second in what we receive”, he said. The regional minister criticised the fact that, according to the Balearic Government, the proposal guarantees this principle only for Catalonia.
Balearic Government warns over its fiscal autonomy
Costa also expressed his opposition to the possibility that the new system could limit the ability of Spain’s autonomous communities to make decisions on their own taxes.
The vice-president said that any requirement to raise certain taxes would be a “red line” for the Balearic Government. He recalled the tax cuts approved during the current parliamentary term and the abolition of inheritance tax between direct family members.
Costa described the Ministry’s proposal as a “take-it-or-leave-it deal” and accused the Spanish Government of putting forward a model with no willingness to negotiate.
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