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Catalonia passes first budget in three years

36bn spending plan approved despite being based on pre-coronavirus economic forecasts

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24 April 2020 10:15 PM

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ACN | Barcelona

Catalonia has passed its first new budget in three years after parliament voted late on Friday evening to approve the 36 billion euro spending plan.

The government had the support of anti-austerity opposition party Catalunya en Comú – Podem, with whom they had brokered a deal in January.

As the content of the budget bill was finalized before the Covid-19 outbreak, neither the estimations of income nor the distribution of spending fit with the current situation.

Despite opposition parties saying that the project would be born outdated, President Quim Torra's executive defended the importance of passing it because it will unlock an extra three billion euros of public spending compared to the last budget passed in 2017.

On Friday, Pere Aragonès, the cabinet's vice president and economy minister, said that the spending plan will be reorganized towards the containment of the virus and economic reconstruction. 

In an interview with public broadcaster TV3, Aragonès said that the government has designed a three-phase plan: First, tackling the pandemic; second, supporting businesses and families; and third, reconstructing the economy. 

Rise in spending and revenue

The budget includes an increase in spending of 3.07 billion euros, from 24.4 billion euros in 2017 to 27.5 billion in 2020.

If all other government expenditure for 2020 is taken into account, such as the amount devoted to paying back public debt, and not merely the funds that will go to each department, the total amount for the bill comes to some 36 billion euros.

However, the budget also foresees more funds coming into the government's coffers, with a revenue increase of 4.17 billion euros, to a total revenue of 26.8 billion euros, an 18.4% increase on the 22.6 billion euros agreed in the last budget for 2017.

It must be noted, however, that these revenue forecasts were made before the coronavirus crisis had taken hold.

Government departments get funding boost

The government departments that will get the biggest boost in funding should the bill successfully pass are the health department (an extra €908m), the education department (up €819m), and the work, social affairs and families department (€387m).

Meanwhile, in percentage terms, the government departments that will see less of an increase in their budgets are the vice presidency and presidency departments, with the digital policy and foreign action departments seeing the biggest percentage rise in funding.

Health, education and employment top spending

In public spending, health and education are the areas that will get almost half of government spending in 2020, with the former accounting for a total of 9.73 billion euros of the total budget, or 27%, and with the latter to get 6.69 billion euros, or 18.6% of the total.

Next comes funding for local institutions, at 5.5 billion euros, or 15.3% of the total, then infrastructure and mobility at 2.7 billion euros (7.7%), social protection at 2.2 billion euros (6.4%), and 1.3 billion, or 3.9% of the total budget, for security and civil protection.

Lower taxes for low income earners

The budget will see a fall in income tax for people on the lowest wages, while taxes are to increase for higher earners. 

The inheritance and wealth taxes will also be modified, with a new tax on power companies also being introduced. 

Election plans on ice

On the morning of January 29, President Torra announced that he would call a fresh election in Catalonia once a budget had been passed in parliament.

But those those election plans have been put on ice, despite the passing of the budget, with all attention focused on the current health crisis.

 

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  • Catalan parliament observing social distancing requirements, April 24, 2020 (Parliament/Job Vermeulen)

  • Catalan parliament observing social distancing requirements, April 24, 2020 (Parliament/Job Vermeulen)

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