Sánchez presents his 2019 budget to MPs, but he needs backing

SPANISH Prime Minister Pedro Sánchez and his cabinet presented their 2019 budget in Parliament last Friday, even though they do not yet have sufficient support from non-ruling parties to push it through.

Backing from left-wing Podemos is likely, as long as the socialist government agrees to its requests to reduce the cost of household electricity bills, increase paternity leave from its current four weeks up to eight, although this will still be half the length of maternity leave.

The price of renting a home is also reduced, but the cost of doing so in major cities, and in some of the popular coastal resort areas, is starting to rise beyond the reach of average earner. That, means that young adults are continuing to live with their parents until well into their thirties.

So far, the Sánchez cabinet has agreed to all the Podemos demands, except for rent prices, of which they have not yet commented. But the issue will be under discussion over the next few months.

A total of 57% of the 2019 budget will be spent on healthcare, social welfare, care costs, pensions and other “grass-root” essentials. Pension spending, in particular, will rise by 6.2%.

Widows’ and widowers’ pensions will go up, and subsidies for the over-52s, scrapped by the previous right-wing PP-led government, will return.

Profit tax will rise for large companies, and income tax will go up for the highest salaries, while value-added tax, or IVA (VAT in the UK) will drop from 21% to 4% on tampons and sanitary towels, to help combat “period poverty”.

The socialist government expects to earn a record 227.4bn euros in 2019, which is a 9.5% rise on 2018, and 8.3% more than that estimated in last year’s budget.

Care funds for elderly, disabled and dependent persons will rise by 59.3%, research and development (R+D) will go up by 5.6%, and 20m euros extra will be spent on the fight against gender violence.

Sánchez aims to work towards pre-school education, including nursery care for the under-threes, which he wants to be free and available to all, in addition to adding extra funds for school materials and well as student grants and scholarships.

The hike in pension spending, says Treasury Minister María Jesús Montero, “is the highest in history”, at 42.10 euros per 100, and widows’ and widowers’ pensions will rise to 60% of the deceased’s salary. Pension increases in line with inflation, as agreed late last year, will be paid in arrears in February.

Income tax will go up by 2% for those earning 130,000 euros a year or more, and by 4% for annual incomes of 300,000 euros or more. Diesel will go up in price by eight cents a litre, of which 3.8 cents will be in tax.

Large companies will pay a minimum of 15% on their profits, but those currently paying 25%, who have an annual turnover of less than one million euros, will have theirs reduced to 23%.

This means an additional 14% in profit tax and 5.1% in IVA (VAT) earned by the Government this year.

Regional governments’ spending “ceiling” will be raised by 4.4%, allowing them more freedom to invest in schools, hospitals, health centres and new infrastructure. The cabinet has reduced its expectations for growth and employment creation, with the former expected to be capped at 2.2%, and the jobless figure to drop by around 800,000, down from the current 15.5% to 14%.

By the end of the year, Spain’s public debt will be in the region of 95.4% of the GDP, keeping it below the 100% mark, and less than stated during the latter part of the PP Government’s reign.

“’Attractive” funding provisions for Catalunya have been included as a carrot for the two regional parties, ERC (Catalunya Left Republicans) and PDeCAT (European Democratic Party for Catalunya), although details of these have not been disclosed.

Votes from the ERC and PDeCAT are likely to be crucial, to comply with the numbers needed for the budget to pass through Parliament.

The main processes and the preliminary stages will get underway next week and, if the budget proposal clears these hurdles, the official Parliamentary debate will take place in the first fortnight of February.


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Posted by on Jan 18 2019. Filed under Local News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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