The Popular Party has proposed to the Government a plan of measures, complementary to the one already approved by the Executive on March 28, to compensate the most vulnerable social and economic groups for the impoverishment derived from inflation.
Based on projections from the Independent Authority for Fiscal Responsibility (Airef), the PP assumes that this year the State will collect 18,000 million more due to inflation. That, after having discounted the effect of the measures already approved in March by the Government, which includes the extension until June 30, VAT reduction on electricity or the bonus 20 cents per liter of fuel until that same date, among other measures. Following the reasoning of the PP of Alberto Nuñez Feijóo, this ‘over-collection’ of 18,000 million grants margin, at least, to continue adopting measures with which to compensate families and companies with additional tax reductions for an amount that the popular ones limit to between 7,500 and 10,000 million euros.
PP calculations deserve some remarksyes In the first place, the greater collection of 18,000 million that derives from the AIREF accounts is not only in taxes and is not only from the State, but corresponds to all public administrations. In reality, in terms of taxes, the highest collection estimated by Airef is 10,400 million, for the State, autonomous communities and municipalities as a whole (the rest, up to 18,000 million is due to social quotes).
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It is also conceivable -and the Government admits this in private-, that the measures adopted by the Executive must be extended beyond June 30, since it is very difficult to imagine that by that date the effects of the war in Ukraine on energy and food prices and on international trade will have already been dissolved. Extending the measures for another six months would mean an extra cost of around 9,000 million, according to Airef’s own calculations. That would deplete most of the $10.4 billion tax cushion. There would hardly be a margin of 1,500 million if, well, according to the accounts of the PP, that would allow, at least, to deflate the personal income tax rate to 5% and correct part of the inflation in the income tax.
Without the need to discuss whether the additional tax cuts proposed by the PP are convenient or not from a political or social point of view, what does seem indisputable is that the accounts do not come out.