Montero: “There will be no problem in prolonging the tax reduction in the electricity bill if necessary”

  • The minister advances some details on the new municipal capital gain that will come into force, if possible, before January 1, and will have a “similar” collection

You already have the guarantee that the General State Budgets for 2022 will pass the first test. The most important. The whole debate next week. But María Jesús Montero (Seville, 1966) has to contend with other fronts: the new municipal capital gain, which promises to be ready as soon as the Constitutional Court notifies its sentence, the increase in electricity and the decrease in collection and, above all, the redesign of the regional financing model, which he intends to have completed – it will be very difficult for it to be approved – in this legislature.

The Minister of Finance and Public Function, leader of the nucleus of absolute confidence of the president, Pedro Sánchez, receives EL PERIÓDICO at the headquarters of his department, stresses that if the Government has been “conservative” in forecasting revenue growth it is , precisely, because he wants to have a margin because if the tax cuts had to be extended on the electricity bill, although he trusts that the measures will work structural. And even though the economy is not rebounding as expected, does not include right now a review of the macro box.

What is the solution that the Treasury will give to the Constitutional Court ruling that annuls the municipal capital gains tax? When would it come into force?

The Government, knowing that there was a high probability, due to previous judgments, that that part of the consolidated text that affects capital gains was finally declared unconstitutional. [varios apartados del artículo 107 del real decreto legislativo 2/2004]We had prepared a text that is pending to be compared with the Constitutional ruling. We want to guarantee several issues. One, legal security for all taxpayers and all those who have to pay the tax. Two, the financing of the local estates, because an important part of their resources come from this tribute. And three, that the new norm be fully constitutional. The idea is that the moment we receive the sentence and it becomes executive, we will have the text in a very short period of time in the Council of Ministers. It can be a decree law or an amendment to the Budget law or a specific text, depending on what has to be done about the tax. I want to transmit absolute tranquility to the municipalities because it is something that we knew, that we had been working on.

Would it go into effect on January 1?

My idea would even be earlier, if possible. We have to see the sentence, to see if it goes in the terms that we had guessed it would and if not, correct the new thing that the TC adds. I hope to take it very, very, very quickly so that it takes effect immediately. If possible, there is practically no solution of continuity between the entry into force of the sentence and the promulgation of the new rule. That is my idea. Our idea is that it be done under the legal instrument that allows the greatest urgency and that it is immediate, but we will need a few days to adapt the sentence to the text that we already have prepared.

Can city councils prepare their budgets for next year under a similar collection forecast [unos 2.500 millones]?

Correct. What we are going to correct is what we understand that the TC can put into question: how the taxable base of this tax is built. What we will do is rebuild the tax base adapting it to the sentence. And, of course, the collection will be similar.

What we will do is rebuild the tax base of the capital gains tax, adapting it to the judgment. And, of course, the collection will be similar

What will happen to the last four years? Can the money paid be claimed?

It seems that it has no retroactive effect, according to the published draft of the ruling. That is limited by the TC, I understand that so that there is not an insurmountable impact on the public coffers.

The Budget project is based on a macroeconomic picture which is proving optimistic in light of the forecasts of the Bank of Spain or AIReF. Does the Government foresee a correction or is it going to wait for the one to be played in April?

Regarding the collection forecast, which has two aspects (the closing forecast for 2021 and the projection of how it will behave in 2022), there will be no change even if the growth forecast could be lowered . The collection is going really well. We expect 2021 to close with an increase in collection of 10.8% Regarding the previous year, it behaves as GDP behaves. And for next year we make a very conservative collection forecast, 8.1%. In other words, with a GDP that will theoretically grow 6.5% this year —even with a revision forecast if it were to be the case—, collection will grow by 10.8%, and next year, with a forecast of GDP of 7%, we project a collection, with a nominal GDP of 8.6%, of 8.1%. That is to say, that we have been more conservative in forecasting the growth of the collection for next year, impossible. At this point we do not have on the table a revision of the GDP, but even if it were done, we would be in a growth of the collection absolutely in step with the forecast for the end of 2021 and with the evolution that we have in the Budgets for 2022, so we do not exactly nothing would have to be corrected.

The same happens with the unemployment figures. We have 20 million people employed, a figure that has not existed since 2008. So that GDP data is not expressing either the evolution of revenue collection or the generation of employment, as has happened in previous crises.

Therefore, a review is not on the table.

That’s right, not at this time.

How much is the slack in the Budgets?

I am convinced that the cost of the debt is going to be much lower, according to the Treasury’s forecasts, than what is in the Budgets. We have not cared about budgeting a little higher, since we have on the horizon the possibility of a suspension of taxes associated with electricity. I could not say exactly what margin we have, but it is clear that we have been conservative because we have not even gone to the growth collection forecast according to nominal GDP. In other words, the budget project has been conservative basically because I foresee that at least some month the fiscal suspension may have to be re-entered due to the electricity crisis.

Reduction of VAT on electricity to 4%? “We have made all the fiscal measures that were within our reach”

Until when that suspension?

Not even the Ministry of Transition can say at this time how prices in the wholesale market will be maintained over the next few months. There is a very important concern in the Government about the cost of some, such as gas. We are taking steps so that there is no problem, not even in supply or procurement, and we are calling on Europe to have a centralized purchase, so that the increase in the wholesale price is not transferred to the consumer invoice or to the industry invoice. , which is highly dependent on the cost of energy. We do not know when the structural measures that we have adopted will acquire cruising speed and therefore when all the stimuli that we are introducing to the reduction of the invoice via tax will be able to be definitively withdrawn. It is difficult to calculate.

Would the slack give for the whole year, if necessary?

That would be like encouraging the adoption of fiscal rather than structural measures in energy matters, something that I as Minister of Finance do not share. I prefer structural measures because if we are not paying all citizens with our taxes. But there will be no problem. I’ll just say that.

Will there be no problem if it is necessary to prolong it as long as it takes?

There will be no problem. I do not want to create expectations or suggest that the cost of energy has to be at the expense of the government’s collection capacity, because that is to the detriment of other spending policies that we would like to promote.

We do not contemplate that the president’s commitment in the electricity bill is not fulfilled

Is the possibility of lowering the VAT on electricity to 4% saved?

We have made all the fiscal measures that were within our reach. We are talking about the fact that the fiscal part that the Government of Spain currently has in place, if it were to last for a full year, would reduce the collection by 4,500 million euros. It is a figure clearly to be conserved since it can be assumed by structural changes.

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Does the Government contemplate that the president’s commitment to pay in 2021 the same as in 2018 is not fulfilled?

We do not contemplate that the president’s commitment is not fulfilled. We are monitoring how the invoice behaves on average and without the CPI. There is no element on the horizon that tells us that we are going to separate ourselves from that scenario. The word of the president is fulfilled.

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