With no tax reform in sight, Montero is studying a gesture to keep negotiations with coalition partners from becoming entrenched
The negotiations on the Budgets for 2023 anticipate a strong push and pull between the government partners due to the measures to deal with the current crisis. It is not just about dealing with the rise in energy prices, but also about the new geopolitical scenario in the face of uncertainty about the outcome of the war in Ukraine.
The socialist wing of the executive has already made it clear that increasing military spending is essential to fulfill the commitment with NATO to reach 2% of GDP by 2030.
Specifically, and in the Update of the Stability Program sent to Brussels in April, the government has already included an increase in the defense budget by two-tenths of GDP for next year.
A total of about 2,500 million euros would be added to the 10,000 million allocated to the Ministry of Defense this year, which, according to the document, will be split between employee compensation, intermediate consumption and gross investment. The idea is that the following exercises will account for an additional expenditure of one-tenth of GDP in both 2024 and 2025.
NATO’s 2021 annual report, which celebrates the start of the summit in Madrid on June 29, increased Spain’s military spending to EUR 12,208 million last year. The difference with the figure that appeared in the Budgets is that this would add other posts outside the Ministry. In any case, to fulfill the Alliance’s commitment, and according to its own statistics, the government would need to invest at least another 12,000 million a year to meet it.
United We Can and the legislature’s traditional allies have already shown their firm rejection of the measure. But they are aware that the government will sell it as a commitment that is impossible to ignore. So the idea of the coalition partners is to counteract this increase in military spending. But more than stopping the budgets – which should extend the current ones until 2023 -, in return to carry out some of their claims of recent times.
At this point, the debate on tax reform resurfaces, which until a few months ago was the great promise of the coalition agreement. And also from the government with the European Commission. But the outbreak of war and its economic impact left the text in a drawer. The message seems clear: ‘If defense spending will increase yes or yes and there will be no fiscal reform, at least let’s implement some of our proposals’.
The PSOE is aware of how difficult negotiations can be. So it has already opened the door for some measures, such as, for example, applying a new surcharge to the major energy and oil companies in the budgets, so that they take part of the impact of the increase in energy if their high profits be taken into account incorrectly.
The department’s minister, María Jesús Montero, also seems to be in favor of introducing the VAT reduction on feminine hygiene products, which was eventually left out of the abortion law promoted by the Equality Minister, Irene Montero.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
