September 23, 2020

Montero announces a rise “above the 20,000 million” of spending on the Budgets




The Minister of Finance María Jesús Montero has announced that in September she will present in September an increase in the spending ceiling by 2021 without comparison with other exercises, since it will be “altered” after the arrival of the European funds. Specifically, he spoke in an interview with EFE of “a very large amount, which may be over 20,000 million euros, from those European funds”

On the project itself has pointed out that it will be presented in the Congress of Deputies late September “or early October”, with the aim that its processing is advanced and the parliamentary support “quite agreed” with the political groups when the budget plan is sent to Brussels, before October 15. In this way, in this same month, both the budget plan for 2021 as a national reform plan incorporating all projects to be financed with European resources.

The Government’s objective is that the 2021 accounts incorporate the first annuity of transfers from the European recovery fund -a total of 59,000 million in three years of the Mechanism for Recovery and Resilience-, which will alter the spending ceiling, to start the implementation of the projects as soon as possible.

Goodbye to big tax hikes

On the other hand, Montero has announced that will negotiate with the political parties the fiscal changes that will be included in the 2021 Budgets, since they will have to be “in step” with the economic situation. In this sense, it could delay some tax increases, although it will seek “progressivity”. All this, in line with what the President of the Government assured last Tuesday in his appearance after the Council of Ministers in which he delayed the changes in Corporation Tax or the creation of new tax figures until the consolidation of the recovery.

The government spokeswoman and finance minister, María Jesús Montero, has advanced in an interview with EFE that, as a “guide” and “letter of introduction” to political parties, will present the economic agreement agreed with United We Can but it has made clear that the programmatic pact was signed at a juncture where an “economic catastrophe” derived from a pandemic was not foreseen.

Montero has pointed out that “you have to be smart and keep pace with that programmatic agreement at the pace set by the economy and of course it will have to be modulated by that economic situation to make the measures at the most appropriate time and they will be between now and 2021 or later ”.

Two speed

Montero explained that, in fiscal matters, although the Executive continues with the roadmap set by the coalition agreement, there will be new developments at two speeds: short-term changes that will contemplate the Budgets and that will pursue the progressivity of the system and a deep tax reform focused on Corporation Tax and in “new tax figures” adapted to ecological transformation and the new economy.

Hacienda will look for the political consensus to undertake the first tax changes and will listen to the proposals of Citizens regarding how to face new income.

The programmatic agreement between the PSOE and Unidas Podemos contemplated the rise in two points in personal income taxfor income over 130,000 euros and four points for those of more than 300,000; a proposal that would clash with the Citizens philosophy of lowering taxes.

«For the 2021 Budget, we have as a guide the programmatic agreement and some fiscal proposals that were understood as adequate and good, and that do not depend on the economic cycle but rather pursue the system progressivityWe will be able to incorporate them after talking with all the political groups to find a point of consensus, ”Montero clarified.

Corporation Tax Rise

The minister, however, has avoided mentioning the other measure agreed with United We Can to implement a minimum rate of 15% in Corporation Tax and 18% for banks and hydrocarbon companies, so this rise could be delayed.

You have pointed out that when economic growth is settled An in-depth tax reform will have to be faced that includes a review of companies, VAT and deductions from some taxes, as advised by the Independent Authority for Fiscal Responsibility (AIReF).

VAT problems

Montero has precisely shown your concern about VAT collection faced with the slowdown in international tourism and foreign trade motivated by the coronavirus, for which it has affected that they will be “alert” because if tourism does not rise they fear a drop in income.

“We will be alert and all measures to reactivate tourism will be welcome », pointed out while affirming that for the moment the data for the first semester of all the tax figures are “quite in line with the forecast forecast”, since VAT collection has fallen by 18% until May.

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