Lower taxes for low incomes and €1bn housing investment: 2022 budget deal

In 2022, Catalonia will have a new budget in place from January 1 for the first time since 2011. The government reached a deal on Thursday with the anti-austerity En Comú Podem party to approve the budget on December 23, 2021. 

The deal comes after several negotiations between both parties. Some of the agreements include investing €1bn in housing, reducing taxes on low incomes, and granting single-parents tax breaks for births or adoptions as well as their rent.

Those earning less than €16,935 gross will see a reduction of 1.5 percentage points in income tax, from 12% to 10.5%. However, people with a gross income between €24,530 and €37,340 will have to pay 15% in taxes, compared to their current 14%. And those earning between €37,340 and €58,460 will see an increase of 0.3% points in income tax. The rest will remain the same. 

Other conditions for approving the spending plan include adding ultra-processed food taxes to the budget, as well as taxes for businesses that generate greenhouse gas emissions. The goal is to have the law in effect from 2023. 

Health care will make up a large part of the 2022 budget as the deal between the executive and Comuns includes an €80m investment in mental health and €50m for public dental clinics.

The government will also allocate €160m towards bolstering non-Covid related health care needs. The majority, €100m will be to fund operations and diagnoses in hospitals, while the remaining €60m go towards diagnoses at primary care centers. Cleaning teams that worked during the pandemic’s first state of alarm will receive a bonus.

Mobility is another one of the major parts of Catalonia’s 2022 budget. The deal reached on Thursday includes several amendments to the spending plan adding €5m to start works on a tram in Camp de Tarragona, 100km south of Barcelona.

Other mobility projects include looking into whether a tram could be built in Bages, in central Catalonia, as well as €500,000 for initial tram plans in the Costa Brava.

To ensure that the agreements are adhered to, the deal between En Comú Podem and the Catalan government includes a committee that will meet once every three months.

Agreement without far-left CUP

The anti-capitalist CUP political force held an internal vote on November 2021 in which 68% of its members opted for filing a complete amendment motion to the spending plan, but at the same time, offering a margin for negotiation.

This margin of negotiation is significant because CUP was the political party that voted in favor of forming the current government. However, they have withdrawn their support regarding the 2022 budget. 

CUP MP Eulàlia Reguant said at the time that they want to "amend" the relationship the government has with Spain – the far-left group is very sceptical of the chances of success of the ongoing talks with Madrid – and the fact that, according to them, the budget continues along with the same trend as prior ones.

Reguant also criticized that the spending on social policies the bill proposes is not enough – meanwhile, the government said beginnings of November that 74.6% of the total spending will be used for social policies, with a 17.3% growth in spending, an all-time high.

The CUP party is especially opposed to projects funded in the 2022 budget such as the 2030 Winter Olympics bid.

Record-high expenditure 

The proposed 2022 Catalan budget will see record-high expenditure, with a historic increase aimed at consolidating the pandemic recovery and reactivating the economy. 

In total, public spending will rise to €38.139 billion if the bill is passed, an increase of €5.618 billion (+17.3%)on the 2020 budget.

European ‘Next Generation’ funds, aimed at stimulating the economy across the continent and aiding the recovery after the pandemic, accounts for €2.142 billion of the budget.