June 22, 2021

The Government is now trying to distance itself from the tax increases promised to Brussels




The clock already marks the countdown for the approval of the labor measures sent to Brussels within the Recovery Plan based on the deadlines that have been set by the Government. “We will never again hear a government tell its citizens that it is time to tighten their belts”, defended yesterday the third vice president and minister of Labor and Social Economy, Yolanda Diaz, despite the fact that the document includes tax increases in order to achieve, in the long term, close the gap in public income with Europe. A plan that has also qualified the head of the Treasury and Government spokesperson, María Jesús Montero, abounding that the
contemplated measures would be insufficient to enter the 80,000 million
to which it aspires to achieve the level of collection with Europe.

On the side of the reforms, Díaz was blunt in stating that all reforms “have to be published in the BOE before the end of 2021” because “Deadlines in law are not discussed, they are met”. In response to journalists’ questions, Díaz also advanced that he will reach agreements with social agents before the end of the current year because “European funds depend on these country transformations.”

«Component 23 ‘is well known by those who meet on the fourth floor of this Ministry. Although I never give deadlines in case they are not met, in this case we risk our country. And I think that the precariousness figures cannot be extended any further, ”added the Minister of Labor. “We have set a date and it must be met,” he added.

During the presentation of the labor measures sent to the EU, Díaz considered that the Government is going to “provoke a real revolution in the Spanish labor market.” For the third vice president, “the legislature begins now” and she did not hesitate to express that the Prime Minister, Pedro Sánchez, and she are “more united than ever.” “We are not going to Europe to learn, Europe also learns with what Spain is doing”, Diaz presumed, who reviewed laws such as the one relating to the ‘riders’ –which reaches the Council of Ministers today–, that of distance work or the royal decree on equal pay.

Along these lines, the Minister of Labor affirmed that “a new social contract” will be rewritten with job stability as the central axis so that young people and those over 45 do not stay out of the labor market at the same time guarantees access to a retirement pension. For Díaz, the labor reform that he raises not only supposes an «amendment» to that of the PP of 2012, but goes much further due to its «ambitious» content. Díaz commented that these transformations in the labor market cannot be carried out without putting young people at the center to pay off the “enormous debt” of Spanish society with them.

One of the novelties that Trabajo wants to implement is the simplification of long-term unemployment protection aid or for the unemployed who have not covered the minimum contribution period, as well as the creation of a new benefit that would integrate all existing ones and that It would come into effect from 2022. According to the document, the amount would amount to 80% of the Iprem, that is, 451.90 euros per month, according to the 2021 indicator.

Tax cuts?

On the fiscal side, the bulk of tax changes that the Government will approve this legislature will come into effect when GDP reaches its pre-crisis level. In the Recovery Plan sent to Brussels the Executive undertakes that the tax reform will erupt in 2023, date that corresponds to when the macroeconomic picture estimates that
the economy will return to its 2019 level
explained at a press conference the Minister of Finance, María Jesús Montero.

The Government expects a growth of 7% in 2022, yes. What will happen if these estimates are not met? Everything will go according to plan. If we don’t get to that point, the whole calendar changes, “said Montero, noting that the reform will graduate as the economy recovers. The also Government spokesperson opened the door, even, to approve specific tax cuts in 2023, the last year of the legislature, within the tax reform: “If the committee of experts so proposes, there could even be tax cuts”.

In any case, he defended that with the proposals included in the plan, Spain will continue without closing the public income gap with Europe, 7.2 points of GDP, equivalent to 80,000 million euros. He also added that it will continue to collect less from environmental taxation than the Eurozone average. In any case, the taxation that affects mobility will go in a separate package, he said, as it will affect the fiscal changes to diesel, registration and circulation.

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