The Balearic Islands will receive an additional 412 million euros under the new financing model.

PalmThe proposed new regional financing model presented this Friday by the First Vice President of the Government and Minister of Finance, María Jesús Montero, would increase the Balearic Islands' annual funding by €412 million compared to the current system. At a press conference, the Government Delegate in the Islands, Alfonso Rodríguez, explained that this new system would place the archipelago above the average in adjusted per capita funding, compared to the current model where it falls below the average.

The representative of the state executive in the Balearic Islands also emphasized that the region benefits from the population-adjusted criterion through the insularity variable and also from the new fixed-cost variable, which takes into account the higher cost of public services for the smaller population or the characteristics of the territory. Furthermore, according to the delegate, the new model also considers the unique circumstances of the Balearic Islands, given that they benefit from the new VAT mechanism for SMEs, which considers the realities of the region's productive fabric and recognizes the region's efforts in developing small and medium-sized enterprises. In addition, the archipelago also receives resources from the new climate fund. Fiscal dumping

Asked about the state government's willingness to set limits to prevent tax dumping by regions that lower or directly eliminate taxes, such as the Balearic Islands, Rodríguez pointed out that although the minister did not specify this issue, "it would not make sense" for the regional government to request improvements in the system.

The Catalan government delegate has sent a message to the President of the Government of Catalonia, Marga Prohens, urging her to take advantage of the new source of funding to improve public services. Not doing so, he asserted, would be "perverse." "An additional 412 million euros in 2027 will provide for many new public housing units and significantly improve healthcare waiting lists. This is what the Spanish government wants the autonomous communities to do," he stated, although he noted that the government led by Pedro Sánchez does not impose taxes. "It trusts the different levels of administration to allocate these funds to meet the needs of the citizens," he added. "Feijóo's 'no' to everything"

Thus, he asked Prohens to abandon Feijóo's "everything against everything" and take advantage of the new resources to improve public services for the citizens of the Balearic Islands. "She should consider that an additional 412 million euros in funding for the Balearic Islands is a good thing. She should consider that the improved funding and the increase in VAT revenue to 56.5% is a good thing, and therefore, she should prioritize the interests of the Balearic Islands," he stated.

Alfonso Rodríguez noted that the proposal put forward this Friday will go to the Fiscal and Financial Policy Council (CPFF), where the autonomous communities can submit their proposals for a financing model, and will then be submitted for majority approval in Congress.

Improved financing in the Balearic Islands

The improved funding for the Balearic Islands is explained by its being one of the regions receiving resources from the new fixed-cost variable, within the adjusted population concept. It is also among the territories benefiting from the VAT mechanism for SMEs and the new climate fund, as Rodríguez highlighted. Along with the increased state contribution to the system, one of the fundamental elements of the new model is the adjusted population criterion. This determines the number of inhabitants in each autonomous community by weighting variables that influence the cost of services and funding needs. Within the adjusted population framework, the Balearic Islands particularly benefit from the insularity variable. It is also among the regions receiving resources from the new fixed-cost variable.