The Government postponed yesterday, for the second time and a few minutes before its vote, the debate on the tax reform that it had introduced as amendments to the law on the minimum tax of 15% on multinationals. The PSOE failed to repair the seams of the investiture bloc, having agreed with Junts to withdraw the permanence of the energy tax, and with the PNV a tax on banks, with a validity limited to three years. Result: a text that the left refuses to support, and which must be rethought and renegotiated by Ferraz in the next three days. The Minister of Finance, María Jesús Montero, tried – until the last moment – to reach a minimum agreement, which she has so far failed to conclude. Anyway, The Executive believes that it is possible to achieve this, at least in key aspects such as the bank tax or the increase in tax on capital income.. Measures that serve as guidelines to continue moving forward with deeper reform.
While waiting for what will finally happen next Monday, parliamentary sources assure that everything indicates that the government will end up withdrawing the amendments to save the initial law, which is in conformity with a European transposition, and which seeks to include a global minimum tax for multinationals, which have the support of the majority of Congress, including the PP. The European Commission requires countries to approve this standard, to avoid sanctions.
If the PSOE fails to convince the rest of the groups, the proposed tax package will be declined, and with it the abolition of the special tax regime for “sociimis”, the tax on luxury products (cars, yachts or private yachts). or the exemption of private health insurance premiums. Also the permanence of the two taxes on the banking sector and on energy, which will bring in 2.859 million euros this year alone; the increase in the maximum rate of personal income tax on capital income from 28% to 29%, the technical reform of corporate tax, which corrects the nullity that the Constitutional Court decreed concerning the modification undertaken by former minister Cristóbal Montoro, and the modification of the VAT directive, with the aim of levying this tax on tourist accommodation rental platforms.
With everything to do, deadlines are against Moncloa. The executive – which is trying to take advantage of a current bill to speed up the deadlines for its labor reform – will have to recompose the approach in the midst of a political war with its investiture partners, which leaves little room for an agreement . He puzzleseems impossible to solve at the moment.
The project agreed between the PSOE and Sumar, which both proposed as a reform plan, displeased Junts and the PNV as much as the parties to the left of Sumar (ERC, Bildu and Podemos). But he did it especially to those of Carles Puigdemont, who continue to monitor from afar the parliamentary disorder from which the PSOE suffers. The panel made it clear from the start that the tax reform moving forward “had to be theirs, or it wouldn’t be theirs.”
Catalan separatists and Basque nationalists reject measures that involve tax increases or that jeopardize the strategic investments of banks or energy companies in their territories. It should be remembered that Repsol’s threat to entrust Portugal with a 1.1 billion euro project in Tarragona and pressure from BBVA and CaixaBank precipitated the failure of these two measures, which the government itself even promised to promote in Brussels. On the other side, left-wing groups are straining and demanding the permanence – yes or yes – of the two taxes.
The precarious negotiation of Budgets
Faced with these problems, the government is struggling to implement a budget package that – at least – has a chance of being adopted by the Congress of Deputies. The conflict over the investiture bloc has – moreover – reopened the parliamentary difficulty that Moncloa now faces in carrying out a budgetary project for 2025. The groups consider it difficult to reach a consensus around the Accounts, while they do not have not succeeded in tax changes. Furthermore, the weeks pass and the Treasury still has not presented the budget bill, making it practically impossible for it to arrive on time and be approved before the end of the year.
If necessary, the year 2025 will start again – again – with the extension of the 2023 accounts, until the government expresses a majority capable of renewing the updated bill. It is worth remembering that today the PSOE has failed to reach an agreement – in this sense – even with its coalition partner, with whom it has been negotiating for weeks.
Added to this is the pressure from the Community Executive, which is still waiting for the budgetary plan to be sent, which must complement the structural budgetary plan that Spain sent to Brussels a month ago. In the document, the Economía included the commitment to promote a tax reform capable of guaranteeing revenues of approximately 4.5 billion euros per year, or 0.3% of GDP. Also other structural measures which should be included in the next budgets, and which are still in the drawer of the first vice-president.
And as if that were not enough, the absence of tax reform jeopardizes the receipt of 7 billion euros from the fifth installment of European funds. A challenge which poses difficulties not only for the budgetary trajectory, but also for the estimated growth of GDP in the short term. Although a drop in public consumption is estimated from 2025, Moncloa counts part of the muscle of the economy’s growth on investments from other parts of European financing.
