Faced with the blockade declared on the left and right, the Government this Thursday in Congress the Finance Commission that was going to vote on the amendments registered in the bill that transposes the European minimum rate directive to multinationals. This rule has become the vehicle with which the Ministry of Finance wants to approve the tax reform committed to Brussels, and has been complemented by countless amendments presented in recent weeks by the parliamentary groups that support the coalition. However, when push came to shove and voting on the final measures, the difficulty in finding consensus has forced the Executive to postpone the examination for the second time, this time until Monday.
The strongest friction point is at the . While ERC, Bildu, Podemos and BNG want to keep it, Junts refuses to give it continuity and the PNV would only support it if it were transferred to the Basque concert. Within the Government, Sumar is pushing to extend it, while the PSOE agrees to eliminate it in exchange for supporting the banking system. There are also frictions with other proposals such as the end of the special tax regime for socimis (real estate investment companies) or the elimination of the VAT exemption for private health insurance and tourist homes. It does seem that there is consensus on other measures such as the tax increase on diesel or investment.
The very complicated parliamentary arithmetic to try to close a common minimum that its usual partners support and that would serve as a starting point for the General State Budget project. The challenge is huge given the ideological antagonism that the PNV and Junts, on the one hand, and the left-wing parties, on the other, stage in fiscal matters. Without forgetting the discursive wars staged by Junts and ERC, the PNV and Bildu, or Sumar and Podemos, to occupy their respective spaces.
The pressure increases, because the fifth payment of European funds, of 7.2 billion euros, depends in part on this reform. For this reason, several government sources consulted said yesterday that if there is no real progress on Monday, it is likely that the transposition will be voted on without amendments and that the tax reform will be attempted later, negotiating with Brussels so as not to lose the disbursement. There is no other option, because time is running out and Spain is obliged to approve before the end of the year the European directive that establishes a minimum tax of 15% for multinationals. The Government is late and has already been taken to European justice by the Commission.
The energy tax, the great obstacle
Through different amendments, parliamentary groups have been including their main demands on tax matters in recent weeks. First it was the turn of the PSOE, Junts and PNV. The three parties, agreed to extend the banking tax for three years and another series of tax increases on tobacco, diesel and capital income in personal income tax. Under that premise, the PSOE and Sumar staged another agreement days later that included ending the special tax regime for socimis (real estate investment companies) and the VAT exemption for private health insurance and tourist homes. The minority partner of the coalition, however, continued to defend the continuity of the tax on energy companies, something that ERC, Bildu, BNG and Podemos also insisted on, whose votes are essential to carry out the reform.
The energy tax, which like the banking tax was born to act on the extraordinary profits that large companies in the sector received as a result of inflation, collected more than 1.5 billion euros last year. Although the PSOE and Sumar agreed to extend it in the Government pact, pressure from companies such as Repsol and Iberdrola and the strong refusal of Junts – whose votes are essential – have ended up removing it from the equation. The left-wing partners, however, remind the Government that their support is also fundamental and demand more ambition in the negotiation.
End of the advantage of socimis
In the same way that the partners on the left of the Government reject the elimination of the tax on energy companies that Junts has turned into a red line, . One of the most conflictive is the elimination of the special tax regime for socimis – the Listed Investment Companies in the Real Estate Market –, put on the table to help improve the supply of rental housing, according to the coalition. Socimis, exempt from paying corporate tax, are investment vehicles that are present in different real estate assets such as offices, logistics centers, hotels, shopping centers, etc. The Government’s fiscal threat has shaken the sector and firms such as Merlin and Colonial, which has led Junts to reject the measure. Catalan nationalists have also positioned themselves against the possibility of ending the tax exemption for private health insurance. And there are also certain doubts about the viability of the Government’s proposal to eliminate the VAT exemption for tourist apartments and to create a luxury tax.
Agreement principle
The amendments agreed with Junts and the PNV, the two tough nuts of the Government, include the permanence for at least three years of the extraordinary tax on banking with a progressive redesign depending on the income of each entity. Also, a tax increase on diesel, capital income in personal income tax and nicotine from electronic cigarettes and the rest of tobacco. It is assumed that all these measures, at least in theory, would have the support of the partners on the left. These would also be in favor of including new features that would combat fraud in VAT on hydrocarbons and correct technical errors in the reform of the PP Minister of Finance, Cristóbal Montoro, in corporate tax.
