ERC Rejects Catalan Budget Deal After Sánchez Meeting Over IRPF Control

Negotiations between the Spanish government and the Catalan Republican Left (ERC) over the national budget remain stalled, hinging on the contentious issue of control over personal income tax (IRPF) collection in Catalonia. Despite a meeting between Spanish Prime Minister Pedro Sánchez and ERC leader Oriol Junqueras on Thursday, February 26, 2026, no breakthrough was achieved, leaving the Catalan budget in limbo.

ERC is demanding a firm commitment from the central government regarding the transfer of IRPF management to the Catalan Tax Agency as a precondition for beginning negotiations on the regional budget. This demand reflects a long-standing aspiration for greater fiscal autonomy within Catalonia. The party initially proposed a bill to formalize this transfer but has since withdrawn it, seeking instead to include the measure as amendments to a new regional financing law currently under consideration.

The situation is complicated by the fact that the Catalan government, led by President Salvador Illa, lacks sufficient parliamentary support to pass its own budget. Illa has publicly reaffirmed his “total” commitment to advancing the Catalan Treasury and securing control of IRPF, but his statements have not yet translated into concrete assurances that satisfy ERC’s requirements. Sources within ERC have expressed disappointment with Illa’s initial responses, highlighting the gap between rhetoric and tangible progress.

The withdrawal of ERC’s proposed IRPF bill was a strategic move designed to avoid a potentially damaging vote in the Catalan Parliament that could have exposed divisions with the Socialist Party (PSOE). By shifting the focus to amendments within the financing law, ERC hopes to secure a more favorable outcome. However, Junqueras has warned that without guaranteed support for these amendments, the PSOE will be seen as unwilling to support Illa’s budget.

The creation of an investment consortium, intended to oversee investments in Catalonia, was initially seen as a potential catalyst for budget talks. However, this has not yet yielded the desired results. ERC is now pressing for the PSOE to explicitly support its proposed amendments to the financing law, a commitment that remains elusive.

The current impasse underscores the delicate political balance between the central government and Catalan separatist parties. ERC holds 13 votes in the Spanish Congress, making its support crucial for Sánchez to pass the national budget. The party’s willingness to withhold support until its demands are met demonstrates its leverage in the negotiations.

The situation is further complicated by ongoing discussions regarding the management of personal income tax. As of February 16, 2026, ERC leader Oriol Junqueras confirmed the withdrawal of the party’s income tax bill, giving more time for a commitment already made for the investiture of Salvador Illa to materialize. The party is now focused on presenting a potential agreement on income tax as part of the amendments to the financing law, anticipating Finance Minister María Jesús Montero’s presentation of the bill.

The core of the dispute revolves around Catalonia’s desire to manage its own IRPF revenue, which would grant the region greater control over its finances and allow it to prioritize spending according to its own needs. The Spanish government, however, has historically resisted such transfers, citing concerns about fiscal stability and the potential for regional disparities.

ERC’s executive committee is scheduled to meet on Saturday, February 28, 2026, followed by a meeting of its national council, where Junqueras will present an assessment of the negotiations. This meeting will be critical in determining the party’s next steps and whether it will ultimately agree to engage in budget talks with the Catalan government. Junqueras is expected to address the media at 12:30 PM on Saturday.

The pressure is now squarely on Illa and Sánchez to deliver on their commitments to Catalonia. Ester Capella, spokesperson for the ERC parliamentary group, emphasized that the best way to initiate new plans is by fulfilling existing agreements, and that the onus should be on Illa and Sánchez, not ERC, to resolve the impasse. The outcome of these negotiations will have significant implications for the stability of the Catalan government and the broader political landscape in Spain.

The lack of a budget agreement could lead to a prolonged period of political uncertainty in Catalonia, potentially hindering economic growth and investment. The situation is being closely watched by financial markets and investors, who are seeking clarity on the region’s fiscal outlook. The resolution of this dispute is therefore crucial not only for Catalan politics but also for the overall economic health of Spain.