Spain to tax rich and large firms, as government ushers in ‘new era’ for economy

27 Oct 20

Hikes to corporation, income and wealth taxes in Spain’s draft 2021 budget underpin the government’s “progressive” approach to public finances, the country’s president has said.

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Pedro Sánchez

Spanish president Pedro Sánchez

Pedro Sánchez, leader of the dominant Socialist Workers’ Party (PSOE), said the measures he presented to congress represented the largest public investment in Spain’s history.

“They have three objectives: to rebuild what the coronavirus crisis has taken away from us, to secure economic growth on a more solid basis, and to strengthen our common heritage – our welfare state,” he said.

To pay for this, wealth over €10m will be taxed by an extra 1%, income over €200,000 by an extra 3%, and corporation tax on the largest businesses will also rise.

Other measures, such as reducing existing tax deductions for payments into private pension schemes, also make the budget more “progressive” than those that came before, Sánchez said.

The budget also includes an extra €3bn for health services and a pay rise for public sector workers.

“The draft budget that we have presented inaugurates a new era in economic policy in Spain,” said deputy prime minister Pablo Iglesias, leader of the junior coalition party Podemos.

“We definitively leave behind the neoliberal stage of austerity and cuts, and mark a horizon of economic transformation, [and] reinforcement of the public sector and social justice.”

PSOE and Podemos formed Spain’s first coalition government in 80 years this January, following months of political deadlock resulting from two inconclusive elections in 2019.

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