Much of the Government's credibility with Brussels, at a time when doubts are mounting on Italy, depend on the correctness of the forecasts for tax increases on which its road map rests. The Executive outlined an increase in revenue of 5.7%, which in the budget plan includes an increase in tax collection of 5,678 million in taxes and fight against tax fraud to cover an increase in public spending of more than 5,000 million. Of this amount, the bulk of the increase in revenue is due to the tax increase that falls on companies, which they must pay 3,566 million euros more in taxes next year. That is, 73.5% of the increase in tax collection derived from the new tax increases, estimated at 4,850 million euros.
The tax burden rises
The fiscal pressure will rise from 38.5% to 39.1% of GDP, its highest level since 2007 when fattening revenues by 26,438 million euros, including the business cycle and all administrations. The Government disaggregates that 6,413 million euros come from the growth of activity, 3,811 million, from the new fiscal increases and 1,500 million taxes. The fiscal broadside will be articulated through the Budgets, which will come into force in March, and three bills for the new taxes on technology, financial transactions and anti-fraud measures that will be approved "in weeks" reads the document sent to Brussels. Only the rise in the Corporate Tax, which will set a minimum rate of 15% for the large company and 18% for banking and oil companies, will enter 1,776 million, while the reduction for smaller SMEs – from 25% to 23% – will subtract 260 million. "The most significant increase in revenue would come from the partial taxation (5% according to announced figures) of the dividends received from foreign subsidiaries," CEOE said in a statement.
As for the financial transaction tax of 0.2% will enter 850 million and finally it will be a finalist: it will be dedicated to defraying the increase in pensions, so that it will have an integral impact on the Social Security accounts. For its part, the so-called "Google rate" will raise 1.2 billion, according to the estimates of the Treasury, which is double what was budgeted by the former minister, Cristóbal Montoro, six months ago. For those companies that try to falsify where they have their activity, by hiding the Internet Protocol (IP) for example, a sanctioning regime is foreseen.
These estimates they seem particularly optimistic. The European Commission calculated that if this tax were applied throughout the continent, it would raise 4,800 million, so that the income estimated by the Government represents a quarter of this forecast. Although the Treasury has lowered the threshold of billing to 3 million to affect more companies, representing the GDP of Spain a bare 7.6% of the EU. For example, the United Kingdom with a similar tax, plans to enter 225 million euros by 2019. CEOE described the government's tax forecasts as "excessive" in this tax. The employer "considers the fulfillment of the total revenue increase" to be unlikely.
Optimistic Google rate
For the rest, the increase of income tax to those who earn more than 130,000 euros in income from work and savings from 140,000 euros will enter 326 million. Likewise, the new environmental taxes that will be created will increase revenues by 670 million, while the increase in Patrimony over the fortunes of more than 10 million euros will be 339 million that will go to the coffers of the autonomous communities, since they manage this tribute.
The reduction of VAT to feminine hygiene products will be 18 million and that of veterinary services will be 35 million. The Government also trusts a good part of the increase in income, specifically 828 million, to a new anti-fraud plan. The Executive, in fact, will soon submit a draft bill related to this aspect. However, 500 million come from anti-circumvention legislation that depends on the European directive of the sector that will be transposed into a bill in weeks, together with the new anti-fraud rule.
The latter will include lowering the threshold to enter the list of defaulters of the Treasury from one million to 600,000 euros to enter 110 million, in addition to including jointly responsible companies listed in this select list. Another 218 million come from limiting business cash payments from 2,500 to 1,000 euros, a threshold that goes down from 15,000 to 10,000 for people residing outside of Spain. It will also be included in the list of tax havens new countries and "big data" will be exploited to detect fraud.
To this is added, for Social Security, an increase in revenue by 1,500 million in 2019 for contributions due to the rise in the Minimum Interprofessional Salary (SMI) of 22% to 900 euros per month. This is explained by the increase of the maximum base and the minimum before this measure. In spite of this, the collection increase for the economic cycle will be higher than that which comes from the increase in taxes. Compliance remains in the air.