Mon. Feb 17th, 2020

The Government urgently seeks 2 billion with Google and Tobin rates



The Government is in a hurry to approve the levies on banking and digital services, known as «Tobin rate» and «Google rate». The Minister of Finance and Government spokesman, María Jesús Montero, said yesterday that both taxes “are ready” and will be approved “in the next Councils” of Ministers. Asked in the halls of Congress about the processing of these bills that the Executive contemplates to approve, the head of the Treasury said that both laws have already completed their public hearing phase and “have passed the entire procedure”, as well as the new Law against tax fraud. Montero declined, of course, to set a date: “I don’t know, because the planning is dynamic,” he replied.

Since the possible approval of General State Budgets seems to go for long, the approval of both rates would allow the Government to generate additional income with which to square the public accounts. The new scenario contemplated by the Executive raises the 2020 deficit at 1.8% of GDP, compared to the previous 1.1%, already revised upwards in its day, which means a deviation of about 8,800 million. With the “Tobin” and “Google” rates, the Treasury expects to raise some 1,850 million euros. An objective that, in any case, could not reach this year. After being approved by the Council of Ministers, both charges must be endorsed as bills by Congress and the Senate. On average, the process takes five months, which would not be in effect until July or August. The Executive, however, could resort to a complicated legal figure to enter into force without the need for parliamentary procedure. You could also opt for the decree law, which is effective immediately after its approval by the Council of Ministers and which must then be endorsed by Congress within one month.

Background

The Government of Pedro Sánchez He has already presented these two taxes before the Cortes before becoming active by the early call for elections, but both bills declined for the dissolution of the Chambers. The «Google rate» is aimed at Large companies such as Amazon or Google pay taxes in those countries where they have an activity with a 3% tax on revenues generated by online directed advertising services, online intermediation services and the sale of data obtained from information provided by the user. The Government of Pedro Sánchez estimates that the new tax could report some 1,200 million euros. However, the sector has already warned that it would have harmful effects on its activity. A PwC report commissioned by Ametic and Adigital believes that it could have a negative impact that could be around 700 million for GDP. In addition, it warns that, ultimately, it will be consumers who pay for it, as companies will transfer their costs to the price of their products.

France has had to reculate after the unilateral imposition of the Google fee

The rate can also open a crisis in relations against the US. The Donald Trump Administration has already rebelled against the plans of countries such as France to impose similar fees and backlash with tariffs. The overwhelming response has led the French Government of Emmanuel Macron to freeze the tax in exchange for the US not imposing more tariffs. The idea is to allow time for the OECD to have a global proposal ready, which should be ready before the end of the year. An option that the US has reluctantly accepted. Despite the warnings made by Washington, the Sánchez Government has been warning for some time that it would impose the measure alone if an agreement was not reached within the European Union or the OECD.

The tax on financial transactions, known as «Tobin rate», is already in force in France. This rate will levy with 0.2% the operations of sale of shares of Spanish companies with a market capitalization of more than 1,000 million euros. The calculations of Government point to a collection of about 850 million euros. But, as in the case of the “Google rate”, customers are the ones who are exposed to the most affected. A report by the French Court of Auditors ensures that this has been the case in the French country since its creation in 2012.

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