Congress approved Thursday — with 178 votes for and 171 against, out of 349 votes cast in the absence of deputy José Luis Ábalos — the government’s tax reform, after an agonizing negotiation, which lasted until the last minute. The approved package of tax measures definitively includes the bank tax and is linked to the Executive’s commitment to Podemos, ERC, Bildu and BNG to also extend the tax on energy companies before the end of the year, when the planned temporary tax will expire. 2022.
The Coalition Executive secured the support of its partners, which at times seemed impossible. With the vote in favor of the parliamentary groups PSOE, Sumar, ERC, Bildu, BNG, Junts, PNV and Podemos, the government obtained approval of the transposition of the European directive which sets a floor of 15% for tax on multinational companies throughout the country. the EU and other OECD countries.
This minimum unlocks the fifth disbursement of European funds from the Recovery Plan, of 7.2 billion euros, and will increase public revenue between 2.5 billion and 7.5 billion, according to different estimates. This government “negotiates, deals, legislates”, underlined Alicia Álvarez, PSOE deputy during the debate in the plenary of Congress, who assured that “democracy continues to win”. In the same spirit, the first vice-president and Minister of Finance, María Jesús Montero, took the floor to insist that “the citizens will thank us”.
The agreement to achieve this package flourished after an agonizing negotiation with Podemos, which opposed the rejection of any reform that did not include guarantees so that it would be approved in parallel to make the tax on energy companies permanent which expires in December and which has raised more than a billion this year alone.
Podemos finally announced its support for the reform after obtaining a commitment from the PSOE to develop a joint bill to maintain this tax through a negotiating commission with the investiture partners. And afterwards, the socialists assured him that Junts was in favor of creating this tax, even if they admit that it contains the tax break for decarbonization projects that the post-convergents have always demanded.
“The ‘malmenorista’ approach is a mistake: we must support this tax exemption reform because it is better than nothing,” declared Podemos Secretary General Ione Belarra from the podium before announcing the agreement . “This path of the lesser evil leads us directly to a government of the PP and Vox. I ask you to rectify, if you want the votes of Podemos, you must impose them on energy companies,” he added.
Minutes later, Podemos released a statement confirming the deal. “Fortunately for the country, we have an agreement for a tax reform which will allow it to be fair, more redistributive and with resources for the welfare state and citizen security. Congratulate all groups on their ability to dialogue. Many hours of work that bear fruit,” said Finance Minister María Jesús Montero in the halls of Congress.
The agreement reached does not call into question Junts’ support for Thursday’s reform. The spokesperson, Míriam Nogueras, and the deputy Jordi Crusat, from the podium, highlighted the agreements they signed with the government to advance the text. “There will be a tax package with benefits for the Catalans and it will be thanks to Junts. In the end, it is this package that counts,” he said to downplay the importance of the negotiations that took place alongside this reform. “This agreement will reduce corporate tax worth 2.6 billion euros for Catalan companies. This benefits more than 250,000 Catalan companies and will facilitate greater employment growth,” he said, also defending the banking tax that they negotiated with the government and which will allow Catalonia to manage its collection.
“Energy companies have earned 10 billion euros in one year [en realidad, en solo los primeros nueve meses de 2024]. Bank, 26 billion. It was entirely reasonable that our starting point was that there was a fiscal pact, yes, with a tax on energy companies and a tax on banks. What was our surprise when, after negotiating, we were told that the tax agreement on the tax on energy companies had to fall, because otherwise we would not have a sufficient majority in this Congress. We could not accept this position. If they wanted our support, this tax had to be extended,” said Pilar Valluguera, ERC MP.
“It seems, gentlemen of the right, that they only know how to govern with a roll. Democracy has strengthened and we must reach agreements, because we are a plural country and this is reflected in this Assembly”, then declared Álvarez (of the PSOE), while continuing the debate on the law, whose content has remained For this whole week overshadowed by the conflict over the tax on energy companies.
Carlos Martín Urriza, spokesperson for Economy and Finance of Sumar, emphasized that “the European directive was a historic demand of the left. This is a big step in the right direction. We will be able to raise up to 7.5 billion additional funds, thanks to the fact that large companies will not be able to transfer a large part of their profits to tax havens, as is currently the case.
“It’s as simple as whoever has more pays more,” summarizes Oskar Matute, about the spirit of the tax reform. “It’s as simple as betting on progressivity and tax justice, because otherwise, all these times in this forum, someone is breaking their chest saying that inequality is a huge problem and that their vital mission as that political office is to end inequality, he said I would lie,” he said.
From “reform” to tax “package”
The approved bill provides for a two-point increase in the personal income tax rate on capital income over 300,000 euros (which implies an increase of approximately 200 million euros in revenue of the State). Also, a reduction in taxes on SMEs and micro-SMEs (for 700 million less income). In addition, some modifications are added to “stop hydrocarbon fraud”. Alongside the resolution of the problems generated by the “failure of tax reform” of Montoro (the Minister of Finance in the Executive of Mariano Rajoy). A problem which “because of the penalties [de los tribunales]» threatened to “give 5 billion euros this year to big companies”, as Vice-President Montero warned.
Finally, in addition to other minor measures, the 50% limit is extended by two additional years to compensate for the negative tax bases of the groups that make up a multinational, making it possible to integrate the amounts not calculated in the following ten years. Foundations that are part of tax companies are excluded from the application of this measure.
Bank tax
This Thursday, various amendments were added to this “tax package” with other tax changes and new taxes. Among them, the bank tax, supported, once again, by the Congress groups PSOE, Sumar, ERC, Bildu, BNG, Junts, PNV and Podemos. In 2024, the temporary tax on financial establishments brought in nearly 1.5 billion euros. This tax was created due to the sector’s record profits, both in 2022 and 2023, thanks to increases in the European Central Bank’s (ECB) benchmark interest rates.
In 2024, despite declines in the official “price” of money in the Eurozone since mid-year, interest rates will on average be at or very close to the 2023 average level, sustaining another year extraordinary for the banks, while many families were drowned by their variable interest rate mortgages.
“Tax reform remained a fiscal package, but we must not give up on continuing to move forward. Because we are facing challenges such as the aging of the population, the fight against climate change…,” said Carlos Martín Urriza. “We are not abandoning the tax on energy companies, nor a new tax on luxury, on inheritances…” continued Sumar’s spokesperson. As he recalled: “Spain is not a tax hell. On the contrary, we are 80 billion below the European average.”
“It may not be the best deal, but it is possible,” said Idoia Sagastizabal, PNV economic spokesperson in Congress. “This is the agreement that parliamentary arithmetic allows us. “This is a legislature of the least common multiple,” he commented. As noted, the PNV had requested two conditions, the first being that “the approved taxes be agreed”. That is to say, Euskadi collects and manages them, in the case that corresponds to its training. And that fraud in hydrocarbons be stopped, an amendment which was also approved this Thursday.
Podemos, PP and Vox slow down the rise of diesel
Among the rejected amendments, Podemos added its votes to those of the PP, Vox and UPN to thwart the PSOE’s attempt to eliminate, from April 1, 2025, the tax bonus enjoyed by diesel compared to gasoline. This rejection results in a loss of public revenue of almost 1 billion.
A handful of measures agreed between the PSOE and Sumar were also abandoned, such as “the end of SOCIMI tax privileges”, the tax on private health insurance or the increase in VAT on tourist apartments.
