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Hacienda seeks more revenue to be able to raise the spending ceiling

Sanchez defends "a first-class tax system to have a first-class welfare state

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Hacienda seeks more revenue to be able to raise the spending ceiling

The first step in initiating budget process is approval of State's non-financial spending limit, popularly known as "spending ceiling". This figure is one of corsets reinforced by previous PP government in Stability Act of 2012, at behest of Brussels, to ensure that public administrations do not fire ir commitments in time of Bonanzas.

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Once spending ceiling has been defined, executive can begin to build budgets of 2019, where items will never exceed that limit. The calculation of this indicator is fundamental in budgetary policy of any government, as it defines expansive or restrictive character of public accounts.

Although it has to be officially approved before June 30th, Sanchez's government does not need to know when it will have it ready. However, in last three years, under mandate of PP, re have already been delays in introducing it. In addition, Sanchez will have to negotiate with political groups to approve it in parliament.

"A first-class tax system"

"Do we want to have a third-party tax system to have a first-class welfare state? It is not possible, "proclaimed yesterday President of government, Pedro Sanchez, after participating in Euro Summit. "Do we want to have a first-class tax revenue to have a first-class welfare state? That's what government of Spain wants, "he added.

Sanchez explained yesterday after meeting with European leaders that his intention is to open a debate on tax system. And he pointed out at summit that he argued that big companies "must tax where y generate profits." Precisely that is one of postulates that European Commission defends in Crusade that it maintains against technological companies. That is why Sánchez has shown his support for European proposal to create a tax on digital services, known as Google's rate. A tribute in which already worked former popular executive and with whom he sought to raise about 600 million this year and anor 1,500 next.

The expenditure ceiling is calculated on basis of estimated income for financial year and refore of economic growth. "A higher level of income would allow a higher spending limit as long as stability objective is met," explains independent Fiscal Responsibility Authority (AIREF), body created to ensure sustainability of public finances. For this reason, Hacienda is carefully scanning Spanish tax system in search of new fiscal spaces that help to increase revenue. The higher expected income, more you can increase spending ceiling and refore have more leeway to include social policies. A position that prioritizes Sanchez's cabinet in budgets of 2019.

Some of ministries have already advanced some of ir priorities, such as eliminating pharmaceutical co-payment to pensioners, releasing motorway tolls or revaluing pensions on basis of prices. So Hacienda looks for margin to pass biggest increase in spending ceiling since, at least, 2013, when it went up by 8%.

The expenditure ceiling is of particular importance to communities, because from this we calculate deliveries of financing system. In addition, Government will have to approve deficit and debt targets for all administrations. For this purpose it is intended to negotiate with communities that have long claimed a more equitable distribution of budgetary margin. To do so, Hacienda plans to convene two Fiscal and financial policy councils during next July. In one deficit targets will be negotiated and anor will be notified of deliveries on account of financing system.


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