Friday, March 29

AIReF endorses European tax rules adapted to each country


The Independent Authority for Fiscal Responsibility (AIReF) supports the promotion of a new European fiscal framework adapted to the country-specific conditions and articulated around an anchor of debt, instead of the deficit; a spending rule, an escape clause and a reinforced role for the national Independent Fiscal Institutions (IFIs).

This is stated in the document published this Friday by the Spanish independent body in which it includes its contribution to the public consultation on the reform of the European fiscal framework, which he presented last December to the European Commission.

In the contribution document, AIReF makes a series of considerations with the aim that the system of fiscal rules become an essential element to achieve the sustainability of public finances and sustainable growth.

Firstly, it stresses the desirability of clarifying the rules that will apply to the Member States from 2023, so that the budget strategy that is launched this year can be consistent with those requirements. Airef emphasizes the need for the new fiscal framework to provide a better orientation for fiscal policy, based on standards more simple, designed on the basis of less volatile variables and more oriented to the medium term.

Consent

With regard to the design of the future framework, AIReF supports the consensus that is emerging among experts and that involves articulating the fiscal framework around a long-term debt anchor, an operating spending rule and an escape clause whose activation would allow a stabilizing fiscal policy in the short term.Currently it is the deficit, the result of the difference between spending and public revenue, that weighs the most.

The body chaired by Cristina Herrero points out that the medium-term fiscal plans must reflect the political commitments of the legislature in terms of net primary spending. The latter should be established following a general assessment of the underlying state of public finances, the cyclical position, future sustainability challenges and reforms or investments with a clear fiscal link.

According to AIReF, the synergies between the search for sustainability, on the one hand, and an adequate composition of public finances, on the other, are “evident”, which is why it supports carrying out reviews of public spending and the periodic evaluation of the quality of public finances.

It also reflects that there is ample scope to strengthen national fiscal frameworks and improve their interaction with the EU fiscal framework. The organization considers that the fiscal framework should allow more country-specific considerations with a more prominent role of the national Independent Fiscal Institutions (IFIs).

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In its document, the entity proposes as tasks that organizations such as Airef could carry out the participation in debt sustainability analyzes at the national level and a more prominent role in the continuous evaluation of compliance with the fiscal framework.

This reinforced role of the IFIs would have to come from the hand of at least two elements: reinforcement of minimum institutional requirements to be able to carry out its functions in a Independent; Y regular monitoring at EU level to ensure that national IFIs are effectively protected from political interference and can adequately fulfill their mandate.



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