Body responds that Spain has already carried out the tax reform regardless of Brussels' calls for | Economy | EUROtoday

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The Spanish Government understands that the tax reform is completed, that’s, that it has already adopted measures to extend tax assortment structurally and that it’s not essential to undertake new ones. It is the response of the Minister of Economy, Carlos Body, sooner or later after the European Commission demanded that Spain perform a tax reform that will enhance the sources it receives via taxes with the intention to cowl the structural deficit that, he understands, the Spanish public accounts have. and that’s included within the subsequent disbursement of the restoration plan. “We have made many decisions in the fiscal framework in recent years. […] We believe that we have already made all the necessary decisions, precisely, to comply with the obligations that this milestone of the fifth payment entails,” declared Corpus upon arrival on the assembly of finance ministers of the euro zone, the so-called Eurogroup, held this yr. Thursday in Luxembourg.

Among the suggestions for Spain printed this Wednesday by the European Commission is to hold out a tax reform to “guarantee fiscal sustainability, reviewing and simplifying the tax system to support economic growth and employment, cohesion and the ecological transition.” It does so as a result of it understands, inside the evaluation similar to the fiscal package deal that it prepares every semester, that tax assortment in Spain isn’t sufficient to cut back the structural gap that they see within the budgets yr after yr, group sources clarify. Therefore, essentially the most logical factor is that this seems now each within the evaluations of the fifth cost of the restoration fund – a piece that’s linked to a tax reform – and within the negotiation of the medium-term fiscal adjustment plan that Spain has to organize to adapt. to the brand new tax guidelines.

The interpretation made by the Spanish Government is completely different: “As the first vice president and Minister of Finance herself has already pointed out, [María Jesús Montero], we have already made many decisions in the fiscal framework in recent years. I believe that we have to update how the fiscal situation is, how income is structurally after all these measures and the changes that have occurred in the Spanish economy. To, we would say, update that evaluation that occurred when that commitment was introduced with respect to the tax reform,” stated Body.

Although the top of Economy doesn’t overtly say that he thinks that progress has been made in closing the structural deficit of the Spanish funds, it’s evident that he defends it, when after this reasoning, he concludes: “We believe that we have already made all the necessary decisions to, precisely , comply with the obligations that this milestone of the fifth payment entails.” With these statements, Body maintains the position that the head of the Treasury expressed a few weeks ago, in which she came to defend that the Government took the tax reform for granted.

In recent years, especially as a result of the health and energy crises, Spain has promoted a series of reforms in the fiscal field, either modifying existing taxes – such as personal income tax or corporations – or creating new figures. In the tax paid by individuals, the Treasury slightly toughened the taxation of capital income; while it partially limited the compensation of losses in the tax paid by companies. In parallel, he launched new figures such as the solidarity tax on large fortunes or taxes to tax extraordinary profits from banking and energy companies. However, the impact of all these changes has been minor, while these measures have been accompanied by reductions in personal income tax or VAT to relieve taxpayers from inflation.

Spain has improved its collection ratios in recent years, although most of the growth comes from the notable improvement in employment, the rise in prices and the fight against the underground economy, and not from the impact of the new figures. For this reason, the country's fiscal pressure (tax revenue in relation to GDP) remains notably below the European average. In 2022 (last year with data available in Eurostat), the Spanish indicator reached 38.3% of GDP, far from 41.2% in the EU and 41.9% in the eurozone. Even further away are countries like France (48% of GDP), Italy (42.9%) or Germany (42.1%).

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