Calviño: “We have to send a message of calm to pensioners”

  • “A drop in personal income tax does not respond to the challenges we have now”

  • “We have taken measures that are equivalent to lowering taxes but with different instruments”

Nadia Calviño (A Coruña, 1968) starred in an intense agenda of events and meetings on Friday in Palma. The Vice President and Minister of Economic Affairs and Digital Transformation reviewed in an interview granted to Diario de Mallorca, a medium that belongs to the same editorial group as this newspaper, the main focuses of an economic news marked by the escalation of prices.

Inflation shot up in March to 9.8%. When do you expect it to peak? And what will that ceiling be?

The objective is to reach the peak of inflation as soon as possible and start the downward path that all the organizations foresee. This week the Bank of Spain has published its forecasts and point to a sharp drop in inflation in the second part of the year to return to around 2% in 2023. This is the objective of the plan of measures to reduce the price of electricity.

They blame the war in Ukraine for the rise in electricity, but the truth is that the bill had been growing for many months before. Is it all the fault of the war?

Prices started to rise last summer. There was one factor first, which was the strength of the global recovery and the problems in global supply chains. Added to these problems was Putin’s preparation for war since last year. We now know that he began to reduce gas storage to raise energy prices and finance the war. In Spain we have an overweight in the price of gas in the Consumer Price Index due to our structure of the wholesale market and tariffs. And that made us the first country to detect the rise in energy prices in international markets. We sounded the alarm and proposed response measures to the European institutions. Unfortunately, time has proved us right. It is positive that now, finally, we can take measures to stop the rise in prices in the electricity market, some at a European level and others at a national level.

Does the Government fear greater social conflict as a result of inflation approaching 10% while wages are stagnant?

We are all tired after two years of the pandemic. And the situation we see on the borders with Europe makes us feel anxiety, uncertainty and sadness. We understand that feeling perfectly from the Government. That is why we are acting decisively to protect and support the citizens and companies most affected. The national response plan that we adopted last Tuesday mobilizes sixteen billion euros. Of these, six billion are direct aid and tax cuts that go to the most affected sectors: transport, electro-intensive and gas-intensive industry, agriculture, livestock and fishing. We are also protecting the most vulnerable groups by extending the electricity social bonus and expanding the measures to lower the cost of electricity and, therefore, the electricity bill of families.

Is the revaluation of pensions and civil servants’ salaries in danger?

The revaluation of pensions is established by law. And at this time we have to send a message of calm to our pensioners.

The Bank of Spain postpones the full recovery of the Spanish economy until the first quarter of 2023, and lowers its growth forecast from 5.4% to 4.5% for this year. Are the Government more optimistic?

We are just working on the macroeconomic table that we will send to Brussels before the end of the month. In this table we will collect the risk elements, but also the strength of the economic recovery. For example, the labor market in the first quarter has had an extraordinary performance. In addition, we are seeing the impact of the labor reform in the form of a greater weight of permanent contracts and therefore a higher quality of employment. In any case, the Bank of Spain, like the rest of the organisations, forecasts strong growth for our country, well above the European average.

Alberto Núñez Feijóo claims to lower personal income tax so that families face this price escalation. Does the government rule it out?

We are always open to taking effective measures to solve problems, and that is why we are deploying the most useful instruments to lower the price of energy and support the most affected sectors. Note that the carriers told us that they did not want a tax cut, that at this time that did not help them. We have taken measures that are equivalent to lowering taxes but with different instruments. For example, the reduction of 20 cents in the price of gasoline. Or the lowering of electric charges and tolls. The type of instrument is less important than effectively achieving the goal we want, which, at the moment, is to stop the price escalation.

Then rule out a drop in personal income tax.

A general reduction in personal income tax does not respond to the challenges we have at the moment because it does not lower the price of electricity, nor does it support the most affected sectors. No country around us is doing it, nor is it recommended by any international organization because it is not an effective measure to solve the problems generated by the conflict in Ukraine. I think that citizens understand this. It is also important to be aware that taxes finance public services. We have to bet on strengthening our Welfare State: health, education or defense. It is what makes us strong when we have to face the challenges that we have experienced in the last two years, first with the pandemic and now with the impact of the war.

On one side is the PP, which asks them to lower taxes even more. And on the other hand, their Podemos partners in the Government, who ask to keep them or upload them to the richest. Is that considered?

In the Government we are focused on responding effectively to the problems we have at the moment. And to be effective we have to go to the root of the problem, which is the rise in energy prices.

In Spain, do the rich pay enough taxes?

Each person will have an opinion about it. In general, the fiscal pressure of our country is below the average of the countries around us. In fact, there are countries that have been able to lower taxes in the energy field because they were much higher than ours. This does not mean that taxes should be raised. Right now, the priority is to curb inflation and minimize the negative impact on growth and job creation.

Some companies choose to practice ‘downsizing’: giving less product for the same price. Sound like a legitimate strategy?

I believe that the competition authorities have to watch that there is no coordinated behavior of the companies in the markets that could deteriorate the well-being of the consumers.

Three weeks ago, Núñez Feijóo, here in Palma, accused the Government of “lining money” with taxes on electricity and gasoline. What did you think of him?

Everyone knows that taxes are not for the Government. Taxes finance public services and we have all been aware over the years of how important it is to have quality public services: health, education, defence, police… In fact, they largely go to the Autonomous Communities. These statements do not respond to the reality of things, it seems rather that it is about discrediting the institutions, which is not good for the country.

Despite everything, do you think that with the PP of Núñez Feijóo there will be more options for understanding than with the PP of Casado?

I hope so. It is very positive that yesterday [por el jueves] I had a meeting with the President of the Government, which was cordial. I trust that Mr. Núñez Feijóo’s attitude in moving from regional to national politics continues to be constructive because during these years Spain has not had the opposition it deserves. And it would be important to have a Popular Party with which it is possible to reach great agreements and advance in the policies of the State.

For the first time in history, the Balearic Islands recorded more permanent than temporary contracts. Is it the result of the labor reform?

I think it is unquestionable and it is very good news. That is the main objective of the reform, to promote employment, but that it be of quality. It should make us all happy because behind these numbers there are people, families and especially young people for whom a very different life horizon opens up.

Is the labor reform that you would have done if you had been Minister of Labor?

It is the labor reform of the Government and it is what Spain needed. It has a great depth that can lead to a structural transformation with a very positive impact on the economy.

The rise in the SMI has not only not destroyed employment, but has increased hiring. Does that show that Minister Yolanda Díaz was right?

The Government’s determination to raise the minimum interprofessional wage is unanimous. Since I became a minister in 2018, it has risen by more than 33%. We have to continue advancing in the improvement of the minimum wage and reach 60% of the average wage at the end of the legislature. The impact of a certain measure depends on the moment in which it is adopted and I think we have done the right thing by raising it in a context of strong economic recovery.

The Balearic Islands is a theoretically rich community and yet one of those that suffers the most social inequality. How do you explain it?

It is one of the great challenges that we have in our country, not only in the Balearic Islands but throughout the country. Spain is a rich country and yet we have a problem of child poverty. We are a prosperous country, but inequality increased a lot as a result of the financial crisis. With the measures that we have been implementing, we have begun to turn this trend around. There are very positive indicators such as the reduction of the salary gap, of early school leaving or the improvement of the protection of the most vulnerable groups with the Minimum Vital Income.

Related news

Now in the Balearic Islands there is a commitment to decrease in the arrival of cruise ships or in tourist places. But decrease is a term that economists do not usually like. What do you think?

The tourism sector is one of the driving industries of our country; It is one of the jewels in the crown. It has to continue modernizing, in a green and digital key, so that it continues to increase its income and capacity to create employment and well-being. With the investments of the Recovery Plan we want to promote a greener, more efficient, sustainable and attractive tourism sector for the future.

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