Treasury Delays Consideration of Promised Tax Benefits for Brussels to Develop Shock Plan

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The open crisis in Ukraine and its impact on inflation and the Spanish economy continue to delay the commitments of the recovery plan sent to Brussels by the Ministry of Finance. The first was the executive’s assumption that there was no time to apply the tax reform measures proposed by the Committee of Experts. The second, which was confirmed this Thursday, is a review of fiscal benefits – bonuses and deductions in state taxes – that the government has included in this document and has not met the agreed deadlines first. The Treasury attributes this to the fact that teams are focused on preparing and implementing a shock plan against inflation.

In particular, component 28 of the recovery plan is in line with the fiscal reforms that the government has agreed to allow the European Commission access to European funds. One of the measures proposed by the executive was to review tax breaks in Spain, “to pay attention to those who distort progress and redistribution.” Promised to discuss 15 of them all in Spain, without specifying which. This analysis included an annual report on five of them during the first quarter of 2022, 2023 and 2024. The first deadline expired this Thursday, without the publication of the relevant report.

“In the first quarter of 2022, 2023 and 2024, the relevant report will be presented and the conclusions of the analysis of tax benefits analyzed in the previous year will be analyzed and, if necessary, reform decisions will be made,” the document reads. . It contained, yes, the dimension: “If the economic situation allows it.” Finance Minister Maria Jesus Montero consulted on the delay and assured this Thursday that it was triggered by work to develop and implement a shock plan against inflation.

“I think everyone can understand that the ministry is absolutely focused on giving an adequate response to the situation in the war in Ukraine, and so now what we have been working on in recent weeks is to see the taxation of electricity bills. “It has a very significant impact in terms of data, as well as the cooperation of the tax agency, as a very important actor in the implementation of many mechanisms, such as fuel discounts,” he said.

The Minister avoided setting a date for the submission of the report. “The government is focusing on the issues at stake, but that does not mean that the lines of action that were initiated or promised were abandoned,” said Montero, who argued that “any economic initiative should be commensurate with the current situation.” “I told the directorate and the tax agency that they are focused on the response plan and studying how this implies the evolution of collection,” he said.

This situation is also reflected in tax reform. Brussels has been promised to prepare an expert report, which has already been submitted in early March. However, the implementation of the proposals was delayed in the calendar due to uncertainty over the economic situation in Europe and Spain due to the war in Ukraine, with the assumption that the context was not the same as in which the report was written. “We are going to continue to work on the necessary fiscal reform that this country needs to have a fairer and more distributed tax system, but it is easy to see that flexibility is good and convenient in this situation,” Montero said. In dimensions.

In the event of a report being submitted, the government, in a document sent to Brussels, undertook to introduce the necessary regulatory changes to the first five tax breaks in the first quarter of next year.

Tax benefits are all initiatives such as bonuses, reductions or deductions aimed at reducing the tax impact on certain tax groups or companies for certain purposes. This policy actually takes into account the expense of the state as it is money that stops. This affects all types of taxes, such as reduced VAT rates or reduced corporate tax rates on the company’s losses in previous years. In this year’s general budget, the state encrypted 42,000 million in tax breaks.

However, organizations such as the Independent Tax Authority (IAEA) have questioned whether these benefits are justified or whether the objectives of this policy are met. The government supports this concern in a plan sent to Brussels, in which it offers a “comprehensive review of existing tax breaks to see if they meet the objectives for which they were approved and if they are incurred.” Revenue is justified. ” In addition, he promised to limit the approval of new tax breaks if they had not previously done research on their effectiveness.

The government did not indicate any specific benefits that would be analyzed in the process, although reference was made to a report by Ayref in 2020, which is expected to be updated soon, known as Spending Overview. The document, compiled by the autonomous body, analyzes 13 tax breaks that affected all major state taxes. This list included co-taxation, contributions to private retirement plans – an event that has already been redirected -, reduced VAT rates or differentiated taxes on hydrocarbons. To this end, a working group has been set up between the Institute for Fiscal Research, the Directorate-General for Taxation and the Tax Agency. These last two institutions, Montero said, are currently focused on responding to the crisis caused by the Russian invasion of Ukraine.

Elimination of fiscal incentives is one of the fundamental points included in the document, which dealt with the Treasury obligations in the recovery plan. Along with the Committee of Experts ’conclusion, tax reform and environmental revenue expansion were some of the steps the government intends to take to achieve fiscal pressure comparable to the European one. Other measures, such as improving the fight against tax fraud, have already been introduced over the past year by a new law called Ways to Reduce Taxes.

Revision of tax breaks means an increase in revenues from certain taxes, which can be read as a tax increase, an issue that the government is trying to avoid in the current context. The Minister himself, while presenting last year’s budget execution data, insisted that the executive had managed to reduce the deficit by collecting taxes and collecting taxes. “It is radically wrong that this government is fiscally hacked, this idea is planted in an irresponsible, childish and childish way,” Montero said. “This CEO has reduced taxes on everyone, not on the privileged minority that seeks to eliminate wealth taxes,” he said, referring to a secret reference to the Madrid community.

Source: El Diario

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