The Treasury will try a fiscal wink to agree on greater spending on Defense

The President of the Government, Pedro Sánchez, together with the Secretary General of NATO, Jens Stoltenberg. / ef

With no tax reform in sight, Montero is studying some gesture to prevent the negotiation with the coalition partners from becoming entrenched

Clara Dawn

The negotiation of the Budgets for 2023 anticipates a tough push and pull between the Government partners on account of the measures to face the current crisis. It is not only about dealing with the rise in energy prices, but also with the new geopolitical scenario in the face of uncertainty about the outcome of the war in Ukraine.

The socialist wing of the Executive has already made it clear that the increase in military spending is essential to fulfill the commitment made with NATO to reach 2% of GDP in 2030.

Specifically, and within the Update of the Stability Program sent to Brussels in April, the Government already includes an increase in the Defense budget of two tenths of GDP for next year.

Pensions, war spending and debt eat up the 2023 Budget

There would be a total of about 2,500 million euros that will be added to the 10,000 million assigned to the Ministry of Defense for this year and that, according to the document, will be distributed between compensation of employees, intermediate consumption and gross capital formation. The idea is that for the following exercises an additional expense of one tenth of GDP will be incorporated, both in 2024 and in 2025.

NATO's 2021 annual report, which celebrates the start of its summit in Madrid on June 29, raised Spain's military spending to 12,208 million euros last year. The difference with the figure that appeared in the Budgets is that this would add other items outside the Ministry. In any case, to fulfill the commitment of the Alliance, and according to its own statistics, the Government should invest at least another 12,000 million a year to comply.

United We Can and the traditional allies of the legislature have already shown their firm rejection of the measure. But they are aware that the Government will sell it as a commitment impossible to ignore. So the idea of ​​the coalition partners is to fight this increase in military spending. But more than to stop the Budgets -which would force the current ones to be extended to 2023-, to get in return to carry out some of their claims of recent times.

At this point, the debate on tax reform resurfaces, which until just a few months ago was the great promise of the coalition agreement. And also from the Government with the European Commission. But the outbreak of the war and its economic impact left the text in a drawer. The message seems clear: 'If defense spending will increase yes or yes and there is no fiscal reform, let's at least carry out some of our proposals'.

Benefits in focus

The PSOE is aware of how difficult negotiations can be. So it has already opened the door to some measures, such as, for example, applying a new surcharge to the large energy and oil companies in the Budgets so that they assume part of the impact of the rise in energy if their high profits are considered unjustified.

The minister of the branch, María Jesús Montero, also seems in favor of introducing the VAT reduction on feminine hygiene products, which was finally left out of the abortion law promoted by the Minister of Equality, Irene Montero.

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