The Government assumes the risk that its macroeconomic forecasts are not fulfilled in the current context of the outbreak of the pandemic, as has been warned by organizations such as the Bank of Spain, the Tax Authority or the European Commission itself.
“All analysts are observing with concern the evolution of the pandemic at the international level and the uncertainty that this entails for the economy,” said the minister on Wednesday. Maria Jesus Montero in the Congress of Deputies, in the debate on the draft Budget law for 2021. The head of the Treasury noted the “progressive recovery of the Spanish economy” in the third quarter. “However, I want to tell you that this crisis is dynamic and, therefore, any forecast has to be analyzed from that prudence, including possible scenarios of risk, deterioration or slowdown,” he added. He also warned that the recovery will be slower in sectors and territories most affected by the application of the restrictions.
VAT reduction for masks
During her intervention in the debate on the seven total amendments presented by the opposition to the Budget bill, the minister announced the Government’s intention to approve this Tuesday a reduction in VAT on masks from 21% to 4%, as well as a cut in the retail price of surgical procedures.
Montero criticized the “irresponsibility” of PP and Vox for presenting repayment amendments against the Budget project and asked the groups to facilitate their processing because they will give “certainty, confidence and hope” in the recovery and will allow the channeling of European funds, increase the investment and strengthen the welfare state.
“They are some extraordinary accounts due to the context in which they are born, for the amounts they contemplate … and it is urgent that the country can count on them to get up and stand up, “argued Montero in defense of the bill, after reviewing the social spending items, which represent 53, 7% of the total.
“Hack or tax hell”
Despite warning of the risks to economic growth, the Minister of Finance defended the Budget project for 2021 approved by the Government on the basis of a forecast of GDP growth for next year of up to 9.8%, after the 11.2% crash estimated for 2020.
Against the analysis of the Bank of Spain and the Tax Authority, Montero also defended that it is “realistic” income forecast with which the Government has for 2021, based on the estimated economic growth, the expected tax increases and the assumption of just over 27,000 million euros of the new European funds.
And to tackle the criticism that right-wing formations see in the government’s tax increases, Montero explained that each of the income measures will affect a very small number of taxpayers, in the largest income bracket. “We already know that they are going to pull hyperbole, ax blow or fiscal hell,” Montero said. From his point of view, the tax measures incorporated into the Accounts are “small adjustments to increase progressivity, promote healthy habits and adapt taxation to the 21st century”, based on personal income tax, corporate tax, VAT on sugary drinks , the higher taxation of diesel, or the new taxes on digital services and financial transactions.
Digsmak is a news publisher with over 12 years of reporting experiance; and have published in many industry leading publications and news sites.