Friday, March 29

Jordi Sevilla encourages Sánchez to accept Feijóo’s offer to lower personal income tax for the lowest incomes


Madrid

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The former minister of the Zapatero cabinet and former economic advisor to Pedro Sánchez in his years as a socialist candidate for the Presidency of the Government, jordi sevillahas encouraged the Executive this Tuesday to adopt a more proactive role to promote an ‘income pact’ and to accept the offer made by the president of the PP, Alberto Núñez Feijóo, to agree on the deflation of the personal income tax rate in the sections in which medium and low incomes are included.

«I have the feeling that there has not been much will on the part of the social agents to agree on an ‘income agreement’, which in my opinion is fundamental in the current context, and I have missed a little more of a greasing will on the part of of the Government”, said Sevilla, during a talk on the efficiency of public spending organized by the Institute of Economic Studies and the College of Economists of Spain.

The proposal of the popular ones, included in the package of measures that Núñez Feijóo sent by letter to Pedro Sánchez on the eve of the approval of the Government’s shock plan against inflation, proposed updating the personal income tax income thresholds for all taxpayers with annual income of less than 40,000 euros, as a way to prevent their possible salary increases as a result of inflation from leading them to pay more taxes. Measure potentially affected 80% of taxpayers with income from work and, as estimated by the PP, would have a budgetary cost of 1,500 million euros in the event of a 5% update. Organizations such as the College of Economists or the Bank of Spain have valued the measure for its selective nature and its orientation towards the most vulnerable segments of the population.

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However, the Government flatly ruled out considering it under the argument that this measure would also indirectly benefit “those who earn more than 300,000 euros,” according to the Minister of Finance, Maria Jesus Montero.

The generosity of the pension system

The political action to cushion the effects of the pandemic, a few months ago, or of the inflationary spiral, now, has stressed public accounts to limits never seen before and has also put the debate on the efficiency of public spending on the table. Both Jordi Sevilla and the president of the CEOE Economy Commission and vice president of the business organization, Inigo Fernandez de Mesahave agreed this Tuesday on the need to place the debate on the efficiency of spending at the center of public debate and to have indicators that allow action on an area, which according to a study by the IEE costs each year 60,000 million euros to public coffers.

Jordi Sevilla has put the public pension system in the spotlight, to whose imbalance he attributes a good part of the structural deficit dragging the Spanish public accounts. “I know a lot of people are going to be upset about this, but the Spanish public pension system is one of the most generous in Europe. There is no other system that guarantees a higher percentage of the last salary with the pension”. Seville has defended the updating of pensions with the CPI, although it understands that the mechanism could have been finer to avoid cost overruns such as the one they will have to assume this public accounts for the lack of control of prices, but has assured that this measure should have been compensated with others to reduce the general expenses of the system, in line with what the European Commission raised last week.

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Íñigo Fernández de Mesa, for his part, has warned of the urgency of proposing a fiscal adjustment plan and of the need to do so on the part of spending to prevent a general increase in taxes reduce the competitiveness of companies and their ability to attract talent.

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