Ballots and Beyond: Illa’s Victory in Catalonia Strengthens Fiscal Sovereignty

Salvador Illa, the candidate backed by Spanish Prime Minister Pedro Sanchez, is on the verge of becoming the new president of Catalonia's government following a pivotal electoral victory in this Spanish autonomous community..Catalonia's Political History.Spain is organized as a parliamentary constitutional monarchy, comprising 17 autonomous communities and two autonomous cities, each with varying degrees of legislative powers. This decentralized system, established by the 1978 Constitution, allows regions significant autonomy in managing their education, health, and policing policies. The central government retains authority over national defense, foreign affairs, fiscal policy, and overall economic management. Each autonomous community has its own parliament and president, enabling regional self-government. This structure aims to accommodate the distinct identities within the country, notably in regions with a strong cultural sense like the Basque Country, and Galicia..In this general organization, Catalonia also possesses a considerable autonomy over local matters such as health, and security through its own police force. Education is another hobbyhorse of Catalan autonomy, as it allowed the region to revitalize a language that was prohibited during the Franco-era to one that is commonly used today..Despite these extensive powers, the relationship between Catalonia and the central Spanish government has often been tense, particularly regarding fiscal autonomy and cultural rights, and Catalonia's recent history has been marked by significant political turbulence, particularly centered around the issue of independence..The most notable episode occurred in 2017 when the Catalan government, then led by Carles Puigdemont, conducted a referendum on independence on October 1. Declared illegal by the Spanish government and the Constitutional Court, the declaration of independence that followed led to a major political crisis, which saw violent clashes in Barcelona and the threat from the Spanish government to take direct control of the region. Puigdemont and several other leaders fled to other European countries to avoid arrest, while others were detained by Spanish authorities, becoming what many Catalan independentists consider to be political prisoners..Even during calmer times, Catalonia's autonomy is a subject that influences broader Spanish politics. Independentist parties began to gain substantial traction in the late 20th century, capitalizing on cultural and linguistic identity to consolidate their political base. By strategically participating in national elections, Catalan parties like ERC (Esquerra Republicana de Catalunya, republican left-wing indpendentist party) and later Junts per Catalunya (center-right independentist party) have managed to send representatives to the Spanish Parliament, and influence national policy from a regionalist perspective. Their presence in Madrid has often been pivotal, particularly in periods of fragmented national parliaments, where they acted as kingmakers against concessions on regional autonomy and fiscal matters..This has been the case in 2020, when the leader of the Spanish Socialist Workers' Party (PSOE, social-democratic party) Pedro Sanchez was able to secure his position as Prime Minister and to form his government thanks to an alliance with the ERC, which raised criticism in parties opposed to Catalonia's autonomy, especially in Vox (right-wing conservative and nationalist party)..Salvador Illa's Election.Salvador Illa is a prominent figure within the PSOE, serving as the First Secretary of the Partit dels Socialistes de Catalunya (PSC, social-democratic federalist party), a regional affiliate of the PSOE. He gained national prominence as Spain's Minister of Health from January 2020 to January 2021, playing a central role in the country's response to the COVID-19 pandemic. His political stance is characterized by efforts to bridge divisions, particularly in the context of Catalonia's push for independence. He advocates for maintaining Catalonia's integral place within a diverse and unified Spain, proposing negotiation and cooperation over confrontation..In the early regional elections held on May 12, Illa's PSC arrived first, garnering 42 seats out of 135, followed by Junts per Catalunya with 35 seats. This represents a notable shift from last decade Catalonia's political landscape, dominated by independentist governments. While securing the most votes in the election, the PSC did not reach the 68 seats needed for an absolute majority and will need to form alliances with other parties in order to govern..A key element of Illa's potential presidency is a contentious deal involving fiscal sovereignty for Catalonia, a promise that has ignited significant debate due to its potential unconstitutionality and broader implications for other regions in Spain. This agreement, part of negotiations with the ERC, foresees Catalonia's exit from the common financial regime, granting the Catalan Tax Agency the authority to manage, settle, collect, and inspect all taxes, including the income tax (IRPF). In addition, the establishment of a new Department of Linguistic Policy in the Catalan government is also part of the agreement..The ERC voted to approve the pact with the PSC on August 5, hence investing Illa as the president of Catalonia, who previously had secured an alliance with Comuns Sumar (eco-socialist coalition)..Criticism and Opposition.This alliance and agreement have faced stern opposition from various quarters, most notably from the Aragonese government, which announced judicial actions against the investiture agreement, viewing it as an "illegal attack" on the Constitution and Spanish equality..Mar Vaquero, Vice President of Aragon, has also criticized the Spanish government for bilateral negotiations with Catalonia and called for issues affecting all autonomous communities to be discussed in inclusive forums. She highlighted the financial repercussions of a fiscally sovereign Catalonia, including a forecasted 2% cut in advance payments to Aragon by 2025, translating to a €300 million loss..The opposition extends within Catalonia as well, in parties such as Vox for instance. Even within parties that lean towards independence, the deal has sparked significant concerns. For instance, the Assemblea Nacional Catalana (left-leaning independentist militant organization) and the Comitès de Defensa de la República (republican left-leaning independentist militant groups) scheduled protests..Junts per Catalunya also criticizes the alliance between Illa and parties such as the ERC and Comuns Sumar due to ideological and strategic differences, such as a fear of a potential dilution of the pro-independence agenda..The Uncertainty Surrounding Carles Puigdemont.The return of Carles Puigdemont, the exiled former leader of Junts per Catalunya, adds a layer of complexity to these developments. Puigdemont plans to return to Catalonia during Illa's investiture debate, facing the risk of arrest due to a still-existing warrant..His return has the potential to reignite public protests and raises questions about the continuation of the investiture session if he is detained. Different scenarios are considered by Catalonia's officials, including postponing the plenum or proceeding without some deputies' participation depending on Puigdemont's status..As Catalonia stands at a political crossroads, the decisions made in the coming days will significantly influence not only the region's governance but also its relationship with the broader Spanish state, and only the future will tell who will truly benefit from this alliance: Illa, who could remain as the politician who managed to stabilize the situation in the autonomous community, or independentists from the ERC, who strike a deal that could virtually give independence to Catalonia.