July 26, 2021

PSOE and Podemos will postpone the bulk of the fiscal increase in the face of the crisis




The ferocity of the economic crisis Given the pandemic, it has caused the government agreement that PSOE and Podemos signed ten months ago to now go into the background. Among the compromised measures that seem to be going into the fridge is the bulk of the tax increases that both parties signed then, especially the one that affects the increase in Corporation tax for companies, they detail sources of negotiation.

The reason is that raising this tax at a time of recovery of the balance sheet and workforce for many companies would be especially negative for activity and employment. The big tax increase was reduce dividend exemption 95% abroad instead of 100% which, together with the setting a minimum rate of 15% for large companies -and 18% for banks and oil companies-, it could raise 1,776 million. The Tax Authority, which doubted the income estimates of measures such as the Google or Tobin tax, did agree with the Executive that this rise would mean a large increase in public income. In this sense, Google rate and the Tobin tax They continue with their pending proceedings in the Cortes: the Senate will not address them this week despite the speed of the Treasury before summer to approve them.

Of course, the negotiation continues its course and is open, so everything can change according to the support that the PSOE finally collects, with the four “rebel” deputies from PDECat in the bedroom. To this is added that since the formation of Pablo Iglesias they want to fight to enforce the tax agreement that was reached in December. Along with it, the purple party works on a proposal for VAT rates To try to make up for the fact that some of the agreed increases may not see the light of day in 2021. In this sense, the work of the Tax Authority evaluating the efficiency of certain reduced and super-reduced rates appears as a reference for this.

At “Tax on great fortunes”, Treasury defends making this reform within the autonomic financing.

Spending ceiling increase

Of course, if some of these tax increases are not achieved, andl PSOE will grant greater concessions to Podemos on the spending side, in addition to other aspects. All this at a time when the spending ceiling of the 2021 Budgets will include the largest increase seen in years, by including part of the funds from Europe -with more than 70,000 million in transfers-. Likewise, the Government wants to draw up in September a limit on non-financial spending in addition to a new path of stability. To do this, it will convene the Council for Fiscal and Financial Policy so that the autonomous communities know the resources of the financing system for next year, with regard to the Budgets.

Before this, yes, the Government will have to solve the important obstacle that the rebellion of the municipalities Against his proposal to let them spend their savings, which Congress validates this week and which will take effect on accounts for 2021 that have not yet transcended the sketch.

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