The Calendar Of The Fiscal Reform Entangles The Negotiation Of The Budgets
The opposing positions of the Government partners on the advisability of including some tax measures of the future tax reform in the 2022 Budgets has entangled the final section of the negotiation of the accounts, which the Ministry of Finance wants to present in the coming weeks.
The budget calendar, for the time being, remains with the intention of approving the budget project in the Council of Ministers on September 28 or October 5, for which a prior agreement between the Government partners will be necessary that both parties agree They are convinced that it will be achieved.
However, the content of that agreement seems to be far from being closed, according to several senior officials at United Podemos this week, especially due to disagreements about whether the accounts should advance tax or housing policy measures that are already on the government’s agenda. .
The Minister of Social Rights and Agenda 2030, Ione Belarra, warned that the agreement “is far” and put on the table several issues, including a more progressive tax system, “substantial progress” in housing or a “universal baby check” .
More specific was the Second Vice President and Minister of Labor, Yolanda Díaz, who demanded that future Budgets include a minimum effective rate of 15% in corporate tax, a measure that is in line with the OECD’s global proposal and that included in the agreement of the Government of PSOE and United We Can.
If the minimum effective rate of 15% is included in the accounts, Spain would anticipate the implementation of the measure globally and would have to decide whether to apply it on the tax base – which would have little effect, since the current average is 19.4% – or on the accounting basis – where the average is 8.3% -.
If applied on the accounting basis or profit, it would affect the results of the companies, since although the nominal rate is not modified – which would remain at 25% -, in practice it would mean limiting the applicable deductions, which could collide with the position of partners such as PdeCAT.
The First Vice President and Minister of Economic Affairs, Nadia Calviño, advocated this week to delay the tax measures until the recovery is consolidated and the group of experts for the tax reform has finished its work, predictably in February 2022.
In addition, Calviño also considered that “it does not make sense” to link issues such as the rental law to the budget negotiation, as claimed by its partners.
The future budgets have encountered an additional obstacle this week with the revision of the GDP of the INE, which now places the economic contraction of the first quarter at 0.6% -two tenths more intense than advanced- and the growth of the second quarter in the 1.1%, far from 2.8% advanced.
This important reduction calls into question, according to some experts, the forecasts for the year as a whole, which the Government maintained at 6.5% in the update published last Tuesday – instead of the day of approval of the Budgets as usual- and that you do not intend to modify.
The 2022 spending ceiling is based on a projection of economic growth of 7%, which if not reached would affect the estimate of income and, therefore, of the public deficit.
Negotiations with other groups
In parallel to the budget negotiation within the Government, the Minister of the Presidency and Relations with the Courts, Félix Bolaños, has initiated a round of parliamentary contacts to discuss future accounts.
Their first encounters have resulted in the frontal rejection of Ciudadanos – due to “absolute incompatibility”, according to their spokesman Edmundo Bal- and the refusal of JxCAT to negotiate if Catalan is not ceased to be “marginalized” in the Audiovisual Law. Both parties rejected the 2021 accounts.
More receptive have been the groups that did support the latest accounts, such as Más País, which has linked its support to issues such as green industrialization or mental health; EH Bildu, who will demand economic and social measures “without red lines”; PdeCAT, which will not condition its support to the processing of the Audiovisual Law, or Compromís, which focuses on regional financing.