The government made it clear that from the alternative budget for 2018, when even the Socialist Party opposed against it, that its intention was to introduce increased taxes on rentals and make businesses pay more. However, once the government included some of these measures, won’t materialize because the budgets for 2019 did not go ahead as planned. What was raised in the Stability Program was that the government, now in a looser position, will try to apply this again.
In any case, the government is exploring, with the help of the Independent Authority of Fiscal Responsibility (AIReF), the possibility of eliminating certain tax benefits that represent a millionaire savings for taxpayers and, at the same time, were a high cost for the State. Of these, about six are under study that have to do with the IRPF and that estimate roughly 13,000 million euros annually, between which are deductions of social character or the reduction by yields of the work.
The Stability Program 2019-2022 emphasizes that the rejection of the 2019 Budgets means that “this year the evolution of revenues is marked by a context of absence of new tax measures”.
But on the other hand, in the Stability Program, the Government notes that: “Without prejudice to the budgetary decisions that the new government may adopt for the current year, this fiscal strategy starts from the current scenario of a budget extension in 2019 for the State and Social Security, to which the measures already adopted by the government are added”.
The government expects tax revenues to increase from 10 million euros in 2019, to 218,248 million, up 4.6%. Additionally, it will be in 2020 when the tax measures already announced would be launched, with a return in the form of a collection of just over 5,600 million euros.
FISCAL MEASURES
IRPF
The PSOE thinks it necessary to take into account in the income tax declaration the economic capacity derived from the wealth. It calls for the recovery of equiptable taxation of the different sources of income and the recovery of the IRPF as a global estimate of economic capacity. For this purpose, they propose to integrate in a single tributary figure with the valuation of the patrimony, of homogenous form and without exceptions, with the taxation of the rent, correcting the double taxation that could be generated.
This model of integrated assessment of income and wealth seeks to ensure that large fortunes, in particular, contribute to the financing of expenditure and investment necessary for the functioning of the country.
In this sense, the executive now in office foresees a stepwise increase in personal income tax rates for incomes exceeding 130,000 euros and 300,000 euros.
Corporation Tax
The PSOE considers it necessary to increase the tax collection capacity of companies, while the effective rates are closer to the nominal ones, eliminating tax privileges and most deductions, controlling key aspects such as transfer prices or the deduction of taxes and financial expenses. While the definitive reform is undertaken, a minimum taxation would be introduced for the large companies so that they contribute to recover the collection of this tax.
Therefore, the government insists on the Stability Program, that the idea is to raise the Corporate Tax paid by large companies and consolidated groups, but not the nominal rate, but cash, by limiting the exemptions to avoid double taxation, which are applicable to dividends and capital gains generated abroad as a result of their participation in subsidiary companies, going from the current 100% to 95%.
Thus, taxes are raised for large companies, which in the Accounts materialized in the imposition of a minimum rate of 15% on Corporate Tax, 18% for banks and oil companies, and a tax of 5% to foreign dividends.
IVA
There are three large productive activities exempt from VAT in the Spanish economy: education, health and financial services. In order to increase the collection, the party proposes that the VAT exemptions currently recognized for all non-concerted private health and education activities be abolished, taking into account the provisions of the community legislation.
Other measures
- The PSOE supports the application of a fee on certain digital services, the so-called ‘Google rate’. The project that transmitted the Congress would gain 3% on tax.
- The PSOE also supports the creation of the tax on financial transactions or the ‘Tobin tax’.
- The promotion of environmental taxation is proposed, although the rise of diesel to equate it with gasoline budgets is not mentioned. The part says it has not abandoned this project.
- Elimination of the so-called ‘sun tax’, thus enabling citizens to play a leading role in the production of renewable energies and in the greater efficiency in their energy consumption, with its corresponding regulatory development.
- Enhance tax incentives for investment in I+D+i in Corporate Tax, so that a greater number of large companies perceive startups as innovative vehicles. They also seek to improve fiscal incentives in Personal Income Tax for private investors and business angels that invest in startups, following the model of the successful British program of promotion of the ecosystem startup SEIS (Seed Enterprise Investment Scheme).
WORK MEASURES
- The government has approved the largest increase in real terms of the Minimum Interprofessional Salary (SMI), to 900 euros per month (14 payments). The objective is for the Interprofessional Minimum Wage to reach 60% of the average salary in Spain in the short term.
- In the area of the fight against the gender gap in the labour market, permits for the birth and care of the minor have been extended to gradually match both parents. For the parent other than the biological mother, the gradual extension of the permit is foreseen to 8 weeks in 2019, 12 weeks in 2020 and 16 weeks in 2021.
- The approval of the Youth Employment Shock Plan, which includes 50 measures and endowed with 2,237 million euros, will allow us to improve employment and training opportunities for Young people in our country over the next 3 years.
- The unemployment benefit has been recovered for people over the age of 52.
- The obligatory hourly registration has been established, to avoid fraud in contracts, especially part-time contracts, and obliging the recognition of overtime that is currently not paid or recognized, in addition to being imposed unilaterally by the employer.
- The possibility that collective agreements establish a compulsory retirement age has been recovered, a possibility that had been denied with the labour reform of the Popular Party government.
- A new Workers’ Statute for the 21st century has been drawn up, combining economic growth with dignified working conditions. The new Statute should be consistent with the technological, social and ecological challenges of this century, to guarantee the full recovery of labour rights, the advancement in democracy and the participation of workers in companies, the need for training continues throughout the working life and to strengthen the role of collective bargaining and social dialogue.
- They seek to address the structural problems of our labour market: long-term unemployment, high turnover, and excess of temporary employment, the duality between temporary and indefinite workers, inequality between men and women and the wage gap. For this, the catalogue of work contracts will be simplified and reordered to three contractual forms: indefinite, temporary and training. The causality in the use of temporary contracts will be strengthened and it will seek against “the abuse of training contracts will be strengthened and it will seek against “the abuse of training contracts and false self-employed workers”.
- The Special Regime of Self-Emplyed Workers has been modified so that they can quote according to their real income. The government intends to continue expanding the social protection of this group with the intention of equating it with that of employed workers. And, they will continue to combat the underground economy and the misuse of some corporate and labour figures, and we will further reduce the administrative and fiscal burdens.
- They plan to promote the modification of Law 31/1995 on Prevention of Labour Risks so that it occupies a central place in companies, especially in the sectors with the highest accident rate, taking into account the gender perspective, assessing the risks specific professionals for the health and safety of women, and also including workers and self-employed workers in the regulations.
Author: Communication Department
