While most people were away on vacation this summer, it was announced that the Catalan Socialists had made a deal with the pro-independence Esquerra Republicana to create a new financing model in Catalonia. If approved, it will be implemented in 2026.

The deal would, among other things, give Catalonia more economic independence and create what some call a “fairer” system. Other, more critical voices have characterized it as “poison for the welfare state”.

But what exactly does this new proposal entail and how is it different from the current tax system?

Lorcan Doherty and Lea Beliaeva Bander explain everything you need to know about the model, from what the changes will mean for Catalonia and Spain to how Spanish and Catalan politicians have reacted.

We will also break down concepts such as the “solidarity payment,” and the ranking principle, or “el principi d’ordinalitat”.

Núria Bosch and Maite Vilalta, the co-directors of the Fiscal Federalism Observatory at the Barcelona Institute of Economics and professors of economics at the University of Barcelona, explain how the new Catalan model compares to federal taxing systems in other parts of the world.

The Catalan phrase of the week is “la clau de la caixa,” which means “the key to the safe”. It not strictly an idiom, but a phrase used often when discussing the new deal.

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