The International Monetary Fund (IMF) supports “structural fiscal reforms” that raise taxes on the richest and eliminate subsidies for companies. In its report on the European region, the body led by Kristalina Georgieva also recommends “a prioritization of spending” to achieve “the necessary adjustment” due to the new EU rules, reactivated this year, after being suspended in 2020 due to the pandemic.
In the midst of the debate on “the pending fiscal reform” in Spain, which is taking place in parallel with the Government’s negotiations with its partners on the General State Budgets (PGE) of 2025, the IMF reinforces the experts and political parties that call for changes in our country’s taxes to make them more progressive—“those who have the most, contribute more”—and more efficient.
“Managing the necessary fiscal adjustment, while addressing growing spending needs [defensa, transición ecológica y digital o reducción de las desigualdades]requires prioritization of spending and structural fiscal reforms,” says the IMF’s “European” report, published this Thursday. This text comes a couple of days after the organization presented its “global” outlook report, which raised Spain’s growth projection and positioned it as the economy that will lead the growth of GDP among the largest in the eurozone in the coming years. exercises.
“In the short term, to protect the recovery, the adjustment must give priority to items with a low fiscal multiplier, for example, the elimination of hiring subsidies and fiscal measures that benefit high-income households,” details the IMF this Thursday.
“Over time, however, tax reforms should promote reallocations of existing spending programs to reflect current policy priorities, as well as create ‘buffers.’ [ahorros, reduciendo el déficit (los desequlibrios presupuestarios) y la deuda] from greater spending efficiency, better targeting, and greater collection by expanding the tax base, closing fiscal gaps and improving digitalization in the Administration [la Agencia Tributaria, en España]”continues the International Monetary Fund.
Regarding spending, the multilateral organization considers that “better budget prioritization of transfer programs” is necessary. For example, “transforming broad-based support measures (such as general energy crisis support measures) into needs-based programs would free up resources that could be allocated to deficit reduction and priority spending such as investment in infrastructure and the improvement and requalification of the workforce,” he says.
The reactivated EU fiscal rules seek for countries to rebuild their fiscal ‘cushions’, after imbalances have skyrocketed due to the pandemic and the inflation crisis, imposing limits on the growth of public spending. In other words, so that they can take measures like those that have been necessary in recent years. In Spain, from the public financing of ERTE, to the reductions in VAT on electricity or food, to the various direct aid to companies or the most vulnerable families.
The IMF’s recommendations are in line with international discussions, at the G20 level, on global minimum taxes on large companies and the ultra-rich.
Similarly, the Government has committed to the European Commission to carry out an “additional” fiscal (tax) reform to reduce the deficit (the imbalance between public income and expenditure). This objective is included in the Fiscal and Structural Plan that the coalition Executive sent to Brussels on October 15, and which is the first important requirement of the new European fiscal rules.
More specifically, this document incorporates “a fiscal reform”, with “new measures” – as clarified by the Ministry of Economy -, which will serve to reduce the public deficit over a horizon that extends seven years, from 2025 to 2031. However, , the details of this “reform” are unknown in a context of parliamentary weakness of the Government.
What was little taken for granted, the transformation of temporary taxes on banking and energy companies into permanent taxes is up in the air, as admitted this Thursday by the first vice president and Minister of Finance, María Jesús Montero. Junts, which has aligned itself with Repsol, has warned that it opposes this commitment by the coalition government.
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