Gestha Tax Benefits Proposal: Government Cuts

The government is immersed in the analysis of tax benefits to settle where it will cut around 1.6 billion euros (one tenth of GDP) and the technicians of the Ministry of Finance (Gestha) propose three ways to fulfill the commitment to the European Commission before the end of the year.

Gestha, which bases its proposal on the analysis of the tax benefits made by the Independent Fiscal Responsibility Authority (Airef) of 2020 and the group of experts who developed in 2022 the White Paper for Tax Reform, stand out in the first place that In the first half of this year 2,960 million have already been recoveredmainly due to the reversal of the sales of energy taxes (1,503 million), the recovery of food VAT (approximately 850 million) and the increase in tobacco taxes, which together with the New Tax on Electronic Cigarettes Liquidshas contributed about 157 million.

They also remember that the Treasury could reduce tax benefits if the government achieves a parliamentary majority to Increase the special diesel tax Up to a maximum of 11.33 cents (VAT included) per liter to equate it with that of gasoline, as already applied a good part of the countries of the European Union, which could be an additional collection of 1,162 million euros per year. The task is not easy due to the parliamentary weakness of the government to convince parliamentary partners to increase the Special Gazette Taxpending since 2021. In fact, the blockade of diesel tax was reason that Brussels will freeze part of the fifth section of the recovery plan received this August.

In addition, they indicate that the hacienda could add a major part of the 391 million annually of the Exemption from Lotteries Awardsas the current threshold of 40,000 euros is more or less reduced.

The third way that Gestha finds a series of measures that are also being ‘victims’ of parliamentary instability, such as the application of the VAT to the tourist floors or the introduction of A new type in the Societies Tax for the Socimi that do not allocate a substantial part of their homes to rental at an affordable price, among others. With the advanced parliamentary calendar, the Treasury technicians warn that both initiatives – of achieving the support – would hardly enter into force in 2025 and would apply in the best case since 2026.