October 27, 2020

The Government will raise the VAT on sugary drinks from 10% to 21% to “promote healthier habits”


Madrid

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The Budget Plan sent to Brussels this Thursday establishes several fiscal adjustments, among which it stands out the increase in VAT on sugary and sweetened beverages from 10% to 21% with the aim of “promoting healthier habits”, as announced by the Treasury in a note. In addition, the document sets a forecast of growth of 7.2% for Spain next year, rising to 9.8% due to the impact of the Recovery Plan presented a few days ago.

The Budget Plan also includes the gradual increase in paternity leave, which rises from 12 to 16 weeks, allowing it to be equated with maternity leave. This measure “represents a further step towards real equality and implies that, for the first time, fathers and mothers will have the right to the same weeks of leave.”

The document also includes the impact of the Minimum Living Income (IMV), a benefit to fight poverty “that was foreseen in the Government agreement and that was accelerated to help the most vulnerable people during the crisis. It is a benefit that will be consolidated in 2021 and that allows the welfare state to be strengthened.

Furthermore, the Government has assured in its communication to the Commission that the deficit will be cut by 3.6 points next year up to 7.7% of GDP, which they attribute to the expected economic growth and a recovery in tax revenues. In addition to including in the 2021 Budgets a first installment of the Recovery Plan of 27,000 million euros in charge of future European funds.

In this sense, they have explained to the community authorities that the Plan also includes a revaluation of pensions to “guarantee” the purchasing power of retirees, as well as the “full implementation” of the Minimum Living Income.

On the other hand, the Executive has estimated the anticovid measures developed to date in more than 210 billion of euros.

The Budget Plan contemplates that the income to GDP ratio stands at 40.3% in 2021, compared to 41.7% in 2020. This decrease in the ratio is a consequence of the greater increase in GDP next year, since revenues in absolute terms in 2021 will increase by 33,447 million euros compared to 2020. An increase in public revenue that is explained by the improvement in the economy and activity and, to a lesser extent, by the fiscal measures that will be applied as of next year.

The estimated impact of the set of fiscal measures and of the new law against tax fraud it stands at 6,847 million in 2021 and 2,323 million in 2022 on a cash basis.

For example, In 2021 the tax on Certain Digital Services and the tax on Financial Transactions will be applied, which were recently approved by Parliament and which will make it possible to modernize the tax system and adapt to the new economic reality. Next year, environmental taxation will also be promoted, in line with the recommendations of the European Commission. In this context, the creation of the Tax on Single-Use Plastic Containers is framed, which has already passed the public information process.

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