Monday, September 26

Brussels warns that tax revenues “are very necessary” in the midst of the PP’s race to lower them

The European Commission is clear. Commitment to intervene in the emergency electricity market; advocates reforming it and wants to limit the profits of energy companies. The Community Executive, in addition, recalls that Europe is experiencing a context of war, after the Russian invasion of Ukraine seven months ago, inflation unleashed at 9.1% and the need to support families and companies.

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In Spain, on the other hand, the PP succumbs to the tax cuts for the rich championed by the Madrid president, Isabel Díaz Ayuso. “I am tired of many Andalusian businessmen residing in Madrid”, assured the president of Andalusia, Juan Manuel Moreno, announcing the abolition of the Heritage tax, while his party demands financing for regional powers, such as Education, Health or Dependency.

And what do they think in Brussels? “In the current context, fiscal resources are very necessary, we need income”, explain community sources: “Spain is now receiving a lot of money from the recovery and resilience funds and, by its own decision, has decided to channel a good part of that money to through the autonomous communities. But that money will run out [en 2026]”.

One of the milestones within the Spanish resilience plan is the tax reform, which will be evaluated in a year in Brussels, and in which Spain is risking several billion. “It is always important to rationalize taxes, look at bonuses and, also, take into account what taxes are applied in a country with unemployment rates such as Spain.”

“You have to see who is affected by the tax cuts and who is not,” say community sources at a time when the PP communities are in the race to lower taxes on the rich. “In the current context, when you have to support the consequences of war, tax revenues are very necessary. With a view to the reform, we must consider collecting in the most efficient way possible, and that is what we are working on”.

Officials from the European Commission have spent three days in Spain evaluating the application and compliance with the Spanish recovery plan.

“Historically, Spain has had delays in absorbing the cohesion funds, but what we are seeing now with the recovery plan is that it is going very fast. It’s still early, there are years of plan left, but for now, there are no absorption problems, the money is coming. When we see how far we have come, how much has been done and how much has been transferred to the communities to make investments, it makes us very optimistic. It is faster than what we have seen so far”, affirm community sources.

In the same way, the sources consider that the “fiscal risks” related to the sustainability of pensions are in quarantine until Spain delivers its intergenerational equity plan and all the reforms planned for the coming months. From there, Brussels will assess whether it continues to see “risks” and, based on that, will disburse or not another 10,000 million next summer corresponding to this part of the reform.

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