Thursday, December 01, 2016

Tightening the belts

Spain needs to bring down its public deficit from 4.6% to 3.1% of GDP in 2017.

However, the International Monetary Fund (IMF) is forecasting that the Spanish economy will expand 3.1% this year and 2.2% in 2017 which reduces the measures that the minority government needs to take to make that reduction. .

The plan is to collect an additional 8 billion Euros, mostly from a hike in corporate tax which accounts for 5 billion. A further 2 billion will come from higher taxes on tobacco and alcohol and a new levy on sugary drinks. The remaining 1 billion will hopefully come from cracking down on tax fraud - particularly IVA - by forcing large companies to automatically file information regarding all transactions subject to IVA.

The state is currently owed over 10 billion Euros in deferred taxes.

Of course, because the PP do not have a majority in parliament, they need the support of the Socialists to bring about these changes.  

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