This Thursday, the plenary session of Congress faces one of the most eventful debates – and votes – in recent months. The government has a second opportunity to promote the essence of its tax reform, which was canceled last Monday by the Finance Commission. Since then, Moncloa has managed to pave the way for its approval and thus save a solid text, through a tangle of parliamentary agreements.
How is tax reform going?
The Government tried to take advantage of a bill currently under parliamentary examination and on which there is broad consensus to “tighten” its tax reform through amendments. The text seeks to impose a minimum tax of 15% for multinationals following European directives. However, the introduction of tax changes has blurred the debate around the standard, jeopardizing its approval and, therefore, expose Spain to sanctions for non-compliance with the transposition of European regulations. Moncloa opted for this route due to deadline requirements. The fifth tranche of the “Next Generation” program requires as a step the approval of a tax reform before the end of the year to recognize the disbursement of 7.5 billion euros. In addition, Spain has committed to Brussels to promote a text capable of raising some 4.5 billionto strengthen compliance with European rules.
What comes out of the Finance Commission?
The chaotic meeting of the Finance Commission last Monday was the result of the lack of consensus around tax reform. The PSOE came with cross pacts with different formations. In other words, some contradicted others. After a tense debate, the socialist group managed to present six transactional amendments guaranteeing a minimum agreement and which were signed – at least – by three different groups. The rest of the amendments – around 120 – were voted on one by one. The vote decided that the basic law (the minimum tax of 15%) would imply an increase in the maximum personal income tax rate on capital income to 29%; also an increase in taxation on vapers and tobacco, or even a plan to combat hydrocarbon fraud. The rest of the main amendments were left aside, but with the possibility of being voted on again during the plenary session of Congress this Thursday. Among them, the introduction of a tax on banks and energy companies, the removal of tax exemptions for SOCIMI or private health insurance, or the establishment of a VAT of 21% for apartments in tourist use.
Can a bank tax be approved?
Yeah. The transactional amendment signed by the PSOE, Sumar and Junts which proposes the bank tax has many options to be approved. Even though it was rejected by the Finance Commission, the socialist group managed – from the early hours of Monday to Tuesday – to make ERC, Bildu and BNG promise to vote in favor of the tax on Thursday, in exchange for commitment to promote the tax on energy companies – which the PSOE had abandoned under pressure from Carles Puigdemont – through a royal decree. The big obstacle now is We Can. Its deputies refuse to support a tax package which does not include – de facto – a tax on energy companies. The Treasury will negotiate until the last moment to convince those of Ione Belarra. Without your support, neither the bill nor the bank tax will succeed.
What about the tax on energy companies?
Moncloa negotiates with Junts – the main detractor of the rate – a formulation that avoids endangering investments in Catalonia, as requested by the post-convergents. For the moment, the PSOE is proposing that the future tax does not affect companies that invest in their decarbonization, but this does not seem sufficient in the eyes of the citizens of Puigdemont. The socialists are now seeking to ensure that projects, such as Repsol in Tarragona, fall outside the scope of the tax.
What are Junts and PNV asking for?
The Catalan separatists and the Basque nationalists were the government’s big headache. Junts and the PNV are responsible for Moncloa’s failure to approve banking and energy taxes from the start. The pressure exerted by various banking and energy entities on these groups forced the PSOE to renounce the second and “soften” the first. Everything will depend on the agreement that the Executive is currently trying to shape.
What are ERC, Bildu and BNG asking for?
On the other side of the conflict are the so-called “left.” All of them, especially ERC, have continued to criticize the fact that companies like Repsol have managed to dilute the tax on energy companies through Junts or PNV. However, the government’s commitment to promoting it in other ways ensures – at least for now – the support of these three groups.
And can we?
This is where the big obstacle lies. Podemos – unlike ERC, Bildu or BNG – does not accept the agreement proposed by Moncloa and maintains its “no” to the entire tax reform which will be examined this Thursday. Government sources confirm that the position of Ione Belarra’s supporters is firm and acknowledge that it will not be easy to convince them otherwise.
What situation is Sumar in?
Sumar is one of the groups that has had to give up the most measures. He signed an agreement with the PSOE full of his proposals which, however, were completely diluted last Monday. There will be no elimination of exemptions for Socimis or private health insurance, no tax on large inheritances or increased pressure on the wealthy.as those of Yolanda Díaz continued. Despite this, all these amendments will be voted on again on Thursday, but they do not have the support necessary to move forward.
How can the government save its tax reform?
All roads pass through Podemos and Junts. If Moncloa manages to find a way to prevent the energy tax from affecting investments in Catalonia, it could present a commitment with the endorsement of Junts, and thus cancel the main argument to which Belarra clings to anchor ourselves in the “no”. However, this does not guarantee a change in the position of Podemos, which defends a rate of force that extends throughout the territory.
How will the text and amendments be voted on?
This is the third item on the agenda for Thursday’s plenary session, which begins at 9 a.m. First, the debate will take place, then the opinion of the bill will be voted on (which includes the minimum tax for multinationals and the amendments approved on Monday), then the amendments on which its signatories will be voted on one by one (parliamentary ). groups) decided to stay alive. Among them is the bank tax, or the one that proposes to tax energy companies.
