The PP has assumed that the fiscal package promoted by the Government and approved in Congress with the majority of the investiture is irrevocable. Despite voting against in the Lower House, Alberto Núñez Feijóo has given orders not to promote a veto in the Senate with its absolute majority, although that veto could be lifted again by Congress. The objective of the decision is to promote amendments that can move forward with the support of Junts or PNV, but along the way the right assumes the banking tax, a 15% floor in Companies or raising the personal income tax on capital income.
The negotiation of the fiscal package took the Government to the limit to obtain the support of all its partners, some with antagonistic positions. PNV and Junts accepted the reform in exchange for removing the tax on extraordinary profits from energy companies from the equation and renegotiating it downwards by 2025. Pressure from Podemos forced the vice president and Minister of Finance, María Jesús Montero, to commit to a joint meeting to outline said tribute that was held last Wednesday without progress due to the absence of the Catalan and Basque right.
The surprise came after the approval of the package by Congress. Instead of activating the Senate’s veto and returning the full text to the Lower House, the PP has chosen to use its absolute majority to introduce amendments to the reform. Feijóo’s plan involved reduce banking tax and expand deductions for companies, as well as try to carry out a personal income tax reduction plan for those under 30 years of age that was already presented months ago.
The PP was counting on adding some of the Government partners that Feijóo has been trying to attract since even before Sánchez’s inauguration. In the popular plans it seemed plausible that Junts and the PNV, or at least one of them, would support their amendments. Not because they need their votes in the Senate, but as a prelude to them also being supported in Congress.
There was even a precedent from this same week. Last Monday, PP and Junts managed to sneak in an amendment to once again suspend in certain cases the tax on electricity generation, estimated at 7% and which has served in the last decade to drastically reduce the deficit of the Spanish energy system. The absence of a PSOE deputy allowed the agreement.
The PP’s approach to the Catalan and Basque right has been accentuated in recent weeks, not only due to the discrepancies in economic matters that exist between the different partners of the Government. The judicial scandals that corner the Executive serve as leverage for Feijóo to try to break precisely the majority that supports Sánchez. The leader of the PP appealed directly to them after the judicial statement of the accused Víctor de Aldama.
But the PP’s wishes were cut short two days later. On Wednesday, the Senate Finance Committee approved Feijóo’s amendments thanks to its absolute majority. But neither Junts nor the PNV supported his proposal.
The parliamentary partners actually defended their alliance with the Government and expressly ratified that they will maintain the agreement closed with María Jesús Montero for Congress. The Catalan senator Joan Bagué made it clear in his presentation in the commission: “We are going to vote against some amendments that perhaps we can share, but out of seriousness, rigor, and commitment to the agreement we are going to vote against.” Bagué did open the door to a possible understanding with the PP for the amendments presented by Junts or to support a tax exemption plan for those affected by DANA, but he rejected the complete package proposed by Feijóo.
PNV senator María Dolores Etxano did not even leave open any option to join the PP and said that they would maintain “the agreements reached in the Congress process.”
The PP amendments to the Government’s tax reform will be definitively approved next Wednesday in the Senate. Afterwards, they will be sent to Congress so that the deputies accept them or not.
Everything indicates that, except perhaps for some details, the bulk of Feijóo’s proposal will fail. Along the way, the PP will have lost the opportunity to veto the complete package and will see again how Pedro Sánchez once again maintains the weak majority that gave him the investiture and approves the fiscal package that must serve as a basis for the negotiation of the General Budgets of 2025.
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