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Sugar solution to ‘debt’ target is a bitter pill

NATIONWIDE taxes on sugary drinks, and an “environmental” levy, will be applied if Spain believes it is incapable of meeting its national debt target this year.

But Catalunya has already jumped the gun! Extra duty on soft drinks there have been imposed via a law passed unilaterally by the north-eastern region’s own Parliament.

It does not affect the rest of Spain, even though the idea has been discussed by the Government for months.

Spain has been ordered by Brussels to cut its deficit to 3.1% of its GDP, which means that if the Gross Domestic Product rises, the debt goes down. But if it falls, the debt becomes larger and the government must introduce these taxes.

Its four-year plan will involve clawing back some half-a-billion euros overall: 300m euros in “green” tax, and 200m from a soft-drink levy.

But the Government is at pains to point out that this will be introduced as a contingency measure only, rather than being applied automatically, as was the idea for this year originally.

The debt-reduction plan presented to Brussels, which covers the 2017-2020 period, also refers to tackling tax fraud.

Part of this could mean that companies and the self-employed might, eventually, have to present their IVA (IGIG) declarations two-monthly rather than quarterly, to enable the taxman to keep a closer check on their accounts.

Also, payments in cash will no longer be able to exceed 1,000 euros, instead of the current 2,500 sum.

The measures, if necessary, are expected to be approved over the course of 2017 and should generate an estimated surplus of 1.8bn euros.

Ministers expect the GDP to grow from 1.9% in 2016 to 2% this year and 2.1% in 2018, remaining as such until 2020 inclusive.

Each year’s 0.1% increase means an additional 1bn euros in gross domestic product for the country as a whole, based upon the 2016 overall sum of 21.53bn euros.

The government has spoken of “increasing sustainable investment”, which, for this year (and next, at least), will have to include 3.5bn euros” to ‘buy back” motorways run by loss-making toll companies.

In fact, firms responsible for maintaining eight toll-funded motorways are actually in receivership.

The government expects to spend 0.8% less on pensions, with overall expenditure on retirement funds dropping from the 25.4% of the GDP in 2013 to 25% in 2020 and 23.5% in 2030.

This is based largely on certain forecasts, including the pension reform and retirement age gradually rising from the current age of  67 for the majority of workers.

Pension reforms have saved the government 1bn euros over the last year, and will save a further 1.15bn this year and 1.2bn in 2018.

Overall, a total of just over 4.8bn will be saved through taxes and 4.54bn in employment, social security and State expenditure.

The public accounts overcame the first hurdle in their passage through Parliament, and, said Prime Minister Mariano Rajoy: “This gives stability and conveys confidence. If we do things well, economic growth and job creation will continue in Spain.”

He described the figures as “wonderful”, adding: “They are the best results on record, and that encourages us to continue working hard.”

And Rajoy, without absolute belief, reiterated his offer to engage in dialogue with all the political groups. “We are talking with everyone, but there are some parties that haven’t even wanted to sit down with us,” he said. “They haven’t wanted to participate, which is their right.”

 

However, Spain’s President insisted he will try to push through the public accounts with the largest number of votes.

He stressed: “Things are going well and must get even better. The key is to approve the Budget with the broadest possible consensus.”

 

 

Short URL: http://www.canarianweekly.com/?p=35934

Posted by on May 12 2017. 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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