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Friday, January 27, 2023

In the fall, the finance ministry will negotiate with Brussels on a tax reform that is “compatible” with the current situation


The finance minister and new number two of the PSOE, María Jesús Montero, in an interview with Agencia Efe.JJ Guillen (EFE)

Finance Minister María Jesús Montero assured this Thursday that the government will negotiate with Brussels in the autumn on the tax reform that it committed to in the recovery plan, so that its measures are compatible with the current delicate situation in Spain and Europe , marked by the energy crisis and runaway inflation. The government had already decided to postpone full tax reform in the face of economic uncertainty caused by the war in Ukraine, but without abandoning adjustments such as some eco-taxes and the recently unveiled new special levies on banks and energy companies, as EL PAÍS progressed. Montero also assured this Thursday that after the summer break he would present a new population proposal adapted to the municipalities.

In an interview with the Efe agency, the head of the finance ministry assured that some meetings are planned from September “to work with the European Union on these measures [fiscales] which are compatible with the situation throughout Europe”, without these representing an “additional effort” for families.

Tax reform is one of the milestones marked in the recovery plan for access to community funds disbursement. The government told the commission that it would be approved in the first quarter of 2023, which would have required it to be published at a public hearing before it could come out as a bill. But the situation has taken a radical turn. The economy, which has not yet fully recovered from the pandemic, is now facing a wave of inflation unprecedented in recent decades, fueled by soaring energy prices, which in turn was exacerbated by the Russian invasion of Ukraine. Now the government must agree with the EU on how to reach this milestone, which was intended to give green taxes a prominent place, as highlighted in conclusions of the Expert Committee on Tax Reform presented in March.

“The tax reform had to be adapted to the situation at any time,” defended Montero this Thursday. “It makes no sense to increase taxes on certain fuels if we apply a bonus,” he illustrated, mentioning the 20-cent fuel bonus included in the anti-crisis decree designed to limit the effects of the war in Ukraine on Ukraine was adopted citizen’s bag.

For now, the government has launched the mechanism to approve two new temporary levies on big banks and energy companies, which have come under heavy criticism from the companies concerned. “It was to be expected that those who are called upon to (…) make a larger contribution to the public coffers would not welcome the measure,” stressed Montero. The government justifies the two new levies with the higher profits these companies are making from interest rate hikes and the benefits that have fallen from heaven, respectively, and will ban them from passing the cost on to consumers.

Montero clarified in the interview that if the situation improves in 2023, the government intends to tackle measures such as “a dissuasive environmental tax on fossil fuel use” and promote renewable energy. With the return of summer, the Treasury must also follow negotiations on the 2023 budget, a law in which fiscal changes can be introduced, although it does not allow the creation of new taxes.

regional funding

The minister also announced that she would send the municipalities a new, adjusted population proposal after the summer break. The previous one – the first step in reforming the funding system, which has been phased out since 2014 – was tabled last December and regional governments had until January 31 this year to submit their allegations. This variable is important to calculate how resources are distributed.

Recalling that since the outbreak of the pandemic, the government has transferred the largest resources in its history to the municipalities, Montero criticized that at the last meeting of the Fiscal and Fiscal Policies Council (CPFF), which took place last week, the positions of the financial advisers on the calculation of the adjusted population continued to collide. He added that the reform of the financing system must have a broad political consensus and that it will be carried out “once the 2023 election results are confirmed so that the territorial administrations have the guarantees”.


Source elpais.com

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