Taxes, investments and other items included in budgets

Posted: Tuesday, December 1, 2020 7:11 AM

Budgets are entering their home stretch. This Monday, they entered Congress for their parliamentary process and this Tuesday it is up to the ministers to take the rostrum to defend the accounts of their respective departments. Here are some of the measures negotiated by the parties:

There will be no increase in diesel

The coalition government will not increase the tax burden on diesel, one of the most widely used fuels for European vehicles. It was one of the flagship tax measures, but after its approval in the Council of Ministers, citizens announced their support for the parliamentary treatment of the draft budget because the government had promised to eliminate the rise of diesel in the process of amendment, as announced the orange party.

The executive had promised the PNV not to increase the tax burden on diesel, although the Council of Ministers came out with an increase of almost 4 cents per liter with which they calculate to enter 450 million euros more in 2021 , an income that they will have to draw from elsewhere. if they finally remove the increase.

Territorial investments

Under the agreements concluded by the government with its partners, in particular in the Basque Country and Navarre, sponsored by PNV and Bildu, and in Catalonia (ERC), but also in Madrid (Más País), Cantabria (RPC), the Canaries (NC) and Aragon (Teruel exists).

Among the most remarkable investments made to date are the 100 million real investments for the Barcelona AVE, 50 million for a plan to renew the machine tool industry and a plan to fight poverty in the Canaries worth 30 million euros. euros. In addition, parliamentary procedure has “frozen” the government’s salary.

10 million have also been reserved for R + D + I in the Aeronautical Technological Plan, there are two new posts intended for the migration crisis (2.5 million additional for Maritime Rescue and 4 million for humanitarian projects), the funding of a pilot project for a waste recovery plant and a study to find low-emission alternatives to peninsular flights.

In the articles of the project, the government also agreed to expand the assumptions of recruitment of research staff, incentives for the participation of companies in technology centers and offshore wind power production with facilities in ports, sale of the Loyola barracks to the city council. San Sebastian, and facilities for hiring teachers at non-face-to-face universities that are not fully public.

Agreements with the PNV

In addition to ensuring that the diesel tax is not increased, the PNV succeeded in getting the Treasury to include investments in certain structures like the airport of Foronda (Vitoria), improvements in stations, investments in R & D & I and in academic research or an engagement in offshore wind power generation.

Bildu’s support

Bildu’s support for budgets has been very controversial and even more so after Arnaldo Otegi’s remarks assuring that “the independent Basque Republic goes by saying ‘yes’ to budgets”.

Otegi has denied that his support for the Sánchez and Iglesias accounts is matched by the approach of ETA prisoners in the Basque Country and has chosen to “comply with prison law” in the case. The aim of Bildu’s support for the EMP is, in his opinion, to keep open what he called a “window of opportunity” and also to obtain more rights for sectors affected by the pandemic and the economic recession. .

The pact with ERC

According to Esquerra, the end of the financial control of the State in the Generalitat has been agreed, the extension of the moratorium on payments of the self-employed to Social Security until March 2021, the settlement of the school debt with the Generalitat in scholarships since 2005, and finally, the creation of a bilateral committee for a fair tax reform which imposes a tax on great fortunes. This last point has been particularly controversial.

Debate on tax harmonization

ERC’s deal with the government to equalize wealth tax across the country has reopened – and accelerated – the debate. ERC accuses the Madrid region of practicing “fiscal dumping” with its low tax policy. But the truth is that the Ministry of Finance has been trying for months to achieve tax harmonization for all of Spain.

According to the draft budget, the executive of Pedro Sánchez plans to increase the property tax by one percentage point – from 2.5% to 3.5% – at the highest rate, where fortunes are greater to 10 million euros. This tax affects the richest: it taxes the assets of natural persons. For example, apartments, premises, how many streams, jewelry, works of art and antiques, intellectual property rights.

Budgets provide for 2.5% to 3.5% increase in the top wealth tax rate

The government believes that the increase in this tax “will affect the regional funds and improve their level of funding”, because although it is a state tax, it is allocated to the autonomous communities, which are not only responsible for its management and perception. They can also regulate their minimum exemption, rates and deductions. For example, some autonomies such as Madrid grant this tax a reduction of 100%.

Compromise “yes”

Spokesman Joan Baldoví assured that his group has launched certain measures in these budgets that improve them for Valencian citizens, such as an agreement for the rail connection from Altet airport, the suburban line Xàtiva-Alcoy and more. investments for Les Arts and IVAM.

Other taxes

Income tax

The preliminary draft budget provides for a three-point increase in the personal income tax for income from capital over 200,000 euros and the personal income tax for income from employment. more than 300,000 euros is increased by two points.

The increase in personal income tax, according to the document provided by the government, would affect 36,194 taxpayers, 0.17% of the total, and would have an impact of 491.4 million euros.

The executive is also considering the possibility of modifying the limits of the reduction in contributions to retirement plans: the joint reduction ceiling (member and company) goes from 8,000 to 10,000 euros and the ceiling of maximum contributions to individual plans increases to 2,000 euros. .

Corporation tax

The increase in corporate tax is expected for large corporate groups, limiting exemptions from dividends and capital gains generated by their participation in tax corporations. According to María Jesús Montero, “this is a measure that is already applied in neighboring countries, such as France, Italy or Germany”.

This increase would affect 1,739 companies, which represents 0.12% of the total. Regarding the economic impact, this would mean 1,520 million euros. The aim of the coalition government with this measure is to “protect SMEs”. In this sense, the report provided specifies that “for three years, companies with a turnover of less than 40 million can continue to apply the 100% exemption”.

VAT on sugary drinks

The government plans to increase the VAT rate from 10% to 21% for sugary and sugary drinks in order to improve the consumption habits of citizens. “Healthy habits are continued, collection measures are not sought,” said María Jesús Montero in this regard. The executive also wishes to reduce the health cost of pathologies derived from the consumption of these products.

This measure would have an impact of 400 million euros and would only affect its sale in stores or supermarkets, but the VAT of restaurants would continue to be at the same level as always. In this sense, the government spokesperson wanted to send a message of “absolute tranquility because the hotel industry will not be affected in any way”.

Votes against

The PP and its partners of the UPN and Foro Asturias follow in the vote against, as well as the Canarian Coalition and the Catalan separatists of Junts and the CUP. Ciudadanos, who supported the treatment of budgets and offered to negotiate, also said “no” to the government agreement with ERC and Bildu and after seeing that only one orange amendment was accepted, that relating to the single health card. Vox is also against budgets, although in their case they gave up on tabling amendments and did not even participate in committee votes.

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