“Budgets compromise the sustainability of public finances”



One day after the approval of the approval of the Budgets 2022, the CEOE sends a message to the Government: the accounts postpone the consolidation of public finances and increase the tax burden. In an initial assessment and waiting to know the content of the text in depth, the employer assures that the Government should be more prudent in its macroeconomic forecasts. In a note sent to the media, the CEOE recalls that the Executive maintains a growth of 6.5% for 2021 and 7% for 2022
despite the jug of cold water released by Statistics
by reducing the pace of growth of the economy in the second quarter.

In addition, the CEOE considers that the Government is not justified in placing spending at maximum levels in many items due to the current context of economic recovery and historical maximums of public debt. “We believe that this expansion of public spending compromises the sustainability of finances in the medium and long term and mortgages in the future the stabilizing capacity of fiscal policy,” they warn from the CEOE. Consequently, from the organization chaired by Antonio Garamendi they believe that, in an economic context such as the current one, it should be decidedly committed to supporting economic activities, and recalls that job creation is in itself also a social policy.

In this scenario of growth in structural public spending the sustainability of public finances can be compromised in the future, advises the CEOE. Along these lines, they highlight that the expected levels of public deficit (5% of GDP) are still far from the reference standards set by Europe (3% of GDP). The CEOE emphasizes that the strategy to redirect the public deficit must go through greater efficiency in the management of public spending rather than increasing income through taxes.

Savings blow

In tax matters, the CEOE emphasizes that the accounts increase the pressure on savings and companies, when the corporate tax burden in Spain is 1.5 points higher than that of the EU (11.1% of GDP compared to 9.6%). In addition, the employer’s association highlights that the collection from Spanish companies is equivalent to 31.9% of total income compared to 24.6% of the European average. “In this context, the introduction of a minimum rate of 15% on the tax base in Corporation Tax will harm the most internationalized companies and that, in addition, make a greater effort in research and development”, reads the note.

The employer also regrets that the Executive establishes
a further reduction in the maximum deductible amount of contributions to pension plans
. A “blow to private savings”, which is added to that already carried out last year and which, in the opinion of CEOE, is a totally unfortunate measure since it goes in the opposite direction to those adopted by the neighboring countries.

“Ultimately, we understand that, although the reactivation process has begun, any major reform, including the tax reform, must avoid seeking short-term results,” the CEEE states.

The CEOE sees it urgent to design a medium-term budget consolidation strategy that avoids tax increases and includes measures that improve the efficiency of public spending. The objective must be to stimulate and lay the foundations to promote long-term, stable and lasting growth, improving productivity, increasing the rate and quality of employment and correcting the important imbalances in our economy to strengthen the productive structure, summarizes from the organization headed by Garamendi.

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