Proposals and measures aimed at deficit reduction and growth development for the next two financial years

De Guindos (Economy), de Santa María
(V-P),  Montoro (Treasury)

Opposition and others say this is not the right way to go

MADRID A special meeting of the Cabinet on Thursday came out with several measures dealing with taxation and the economy in general. Among the salient points is the creation of an Independent Fiscal Authority who will control the budgets of all government agencies and ensure that they meet their anti-deficit targets. Another is that real retirement age will be made 'closer to the normal age'; in other words, early retirement paid for by the taxpayer will be phased out, and pensions will become closer to normal life expectancy factors, in such a way as to make the system sustainable. Here are some of the more important decisions approved in Cabinet on Thursday, only a few of the 48 that were finalised. BY THE BEGINNING OF THE YEAR YOU WILL NO LONGER BE ABLE TO READ ITEMS SUCH AS THIS UNLESS YOU SUBSCRIBE. Subscription information will be available soon.>>>

Deficit

• The first quarter of 2013 will see the creation of the Independent Fiscal Authority as described above.

Pensions and Employment

• Pensions will rise by 1% in 2013
• Early or partial retirement will be reformed as described above
• A youth employment strategy will be approved by December. This will be called a 'dual system' whereby trade schooling will be more closely involved with employers.
• Employment services will see closer cooperation between the private and public sectors

Taxes

• Betting winnings of over €2,500, from the State Lottery (Loterías del Estado) will be subject to a new tax of 20%, producing income of €824m for the tax man
• Inheritance tax will remain as it is. €700m to the tax man
• The present tax deductions for the purchase of first homes will be eliminated. €90m to the tax man
• Short term Plus Valías (Capital Gains) will be taxed at the same rate as the Income Tax (IRPF). €90m in savings
• Big business will get a higher deduction rate for amortizations. €2,371m in 2013 and 2014
• Updated company balances will be taxed at 5%. €300m over the next two years

Growth

• A new incentive plan for the car industry is announced, coming into effect on October 1 (today!). It is aimed at replacing cars of between 10 and 12 years with new ones that are more fuel effiicienct. Government and manufacturers will contribute to cut purchase prices by €2,000 on new vehicles. Savings of €16m per year
• A 'liquidity market' of promissory notes for small and medium businesses (known as PYMES) will be created, aimed at fomenting the financing of these businesses.
• PYMES will be encouraged to join the Alternative Stock Market (MAB in the Spanish Acronym: Mercado Alternativo Bursátil), where 21 companies have already been able to obtain financing.
• A government agency will be created to centralize and encourage exports, to be regulated by the Instituto Español de Comercio Exterior (ICEX).
• A new Single Market Law will be approved in the first quarter of 2013 aimed at freeing up present bureaucratic procedures that businesses have to go through to sell their products in places other than where they are produced. This will also apply to the 'collegiatisation' of services such as architects and lawyers, among others, who will be able to offer their services anywhere in Spain.
• A new entrepreneurs' plan will be created in Q1 of 2013, whereby licensing procedures for new businesses will be made easier, thus fomenting employment.
• A new legal entity, called Empresario de Responsabilidad Limitada (Limited Responsibility Business Person), will be created.
• Procedures for tendering for business will be improved (presumably speeded up), and administrative costs for opening or closing a business will be reduced.

Others

• A State Agency of Investigation and a National Markets and Competition Commission will be created, aimed at simplifying the supervising entities that (supposedly) watch over markets such as the audiovisula, transport or telecommunications, for instance.