The Spanish government has been unable, so far, to carry out the tax reform in the terms in which it had proposed it. Although the finance committee of the Congress of Deputies has endorsed in the extremes the opinion with the European directive for large multinationals to pay a minimum rate of 15% on corporate tax, the amendments that have succeeded leave on wet paper the aspirations that the executive had deposited in the tax package. For now, measures such as the extraordinary tax on banking, the exemption from private health insurance premiums, and the review of the fiscal regime of social security companies have fallen. He has also derailed the revision of the VAT on tourist accommodation and the equalization of petrol with diesel, one of the star proposals of the executive. In fact, this last measure meant an estimated collection of more than 2,000 million euros, according to the Fiscal Authority. Whether they see the light of day or not will therefore depend on the vote this Thursday in the plenary of the lower house, the last attempt that the Spanish government will have to be able to approve more fiscal adjustments.
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After a torturous debate that began at five in the afternoon, as well as repeated recesses (between ten and twelve at night, the commission stopped, causing the anger of congressional deputies and workers), the final vote has come as the clock almost struck one in the evening. The opinion of the commission with the transposition of the European directive has ended up prospering after a negotiation against the clock with ERC, EH Bildu and the BNG, since for hours none of the three formations has secured their favorable vote. The PSOE has given its approval after agreeing to a bank tax with higher tax rates and for the collection to go to the autonomous communities, as reported by the three parties in a press release. The measure will be voted on this Thursday.
But the agreement with the left-wing formations was also able to be derailed because they reached the “commitment” of the Spanish government to extend, through a royal decree law, the energy tax for one year, as can be seen of the communiqué. A promise that has already raised the suspicions of Podemos. “With no guarantees that Junts will vote in favor of it, it’s wet paper”, the spokesperson for the lilac formation in Congress, Ione Belarra, has acknowledged on the social network X. Minutes after the final vote in the commission, the Ministry of Finance sent a statement “clarifying that it maintains its agreement with Junts not to tax energy companies that maintain their effective investment commitment for decarbonization.”
A bad tax reform?
The truth is that the energy companies, and in particular Repsol, have been the collateral protagonists of the finance commission. The public and private pressure of the oil company against the extraordinary tax on energy companies left the Spanish government’s fiscal package badly injured. The fact that the PSOE renounced this extraordinary tribute – as it agreed with Junts, which has taken the oil company’s threats as its own in terms of investments, but also with Sumar – upset the left partners, since from ERC to EH Bildu and Podem. Introducing it, however, is a red line for the boarders. For all that, and unlike what may happen with the extraordinary tax on banking, there is nothing to suggest that the energy tax will be a reality from next year.
“It’s blackmail,” said ERC deputy Pilar Vallugera during the finance committee. At first, the republicans had proposed that they would vote in favor of the opinion if the PSOE withdrew all the amendments and, therefore, only the minimum tax on multinationals was voted on and another path was chosen to address tax reform. That is why, when they have not withdrawn and some have even prospered, it has been so difficult to convince ERC. In fact, the formula chosen by the Spanish government when proposing tax reform (through the processing of amendments in the Congress of Deputies) was already criticized last week by the PNB.
Beyond the minimum tax
All in all, in line with the minimum rate of 15%, the tax commission has indeed endorsed some tax changes, albeit minor ones. It is about the change on the reforms of the former Minister of Economy Cristóbal Montoro (PP) to solve the problems generated on the corporate tax. The increase from 28% to 30% of taxation on capital income over 300,000 euros, the new tax on liquids for electronic cigars and other tobacco-related products, as well as the reform that seeks to put end to hydrocarbons VAT fraud. All these amendments have already been introduced into the law.
The PSOE had agreed these measures with the minority partner in the government, Sumar, but they were also part of the package of measures negotiated with the PNB and Junts. Once the support of the right was on track, the socialists opened negotiations with ERC, EH Bildu and the rest of the left partners. As could be seen this Monday, however, the talks have not been fruitful.
The transposition of the minimum tax on multinationals, however, are not the only pending duties that the Spanish government has with Brussels (Spain is on the verge of a possible sanction by the Court of Justice of the European Union (CJEU) due to the delay in applying the directive). The fiscal reform is important because it is one of the commitments of the Recovery Plan and the full disbursement of the fifth payment of European funds (about 7 billion euros between loans and subsidies) depends on it. Awaiting the vote this Thursday in plenary, for now the fiscal package is far from a reform like the one announced by Moncloa.
