Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

25 February 2014

Spain's Rajoy announces measures to lower taxes, incentivise job creation and boost financing


In his speech during the Debate on the State of the Nation, Rajoy took stock of the reforms implemented by Spain to date, and their impact on the course of the Spanish economy. He also explained the reforms that Spain is due to implement in the second half of this legislature.

In his opinion, the standpoint from which Spain now faces its immediate future - no longer with "hope but rather with ambition" - has "drastically changed" since the Debate on the State of the Nation last year. "We have turned the situation around; we have gone from negative to positive growth, from decline to recovery, from fear to hope."

This new outlook is enabling us to consider an upward revision for our GDP growth forecast from 1% this year to 1.5% next year. According to Mariano Rajoy, "the foreign trade sector will continue to play a fundamental role - with a surplus in the current account and capital balance of 2% in 2014 and 2.5% in 2015". All this will enable progress to be made "on achieving our main objective: fostering job creation". In this regard, the President of the Government stressed that "net employment growth will be achieved this year, in 2014".

Tax reform and incentivising job creation

Mariano Rajoy explained that all this goes to show that the sacrifices made by all parts of Spanish society are producing results and that "the time has now come to offset a good part of the demands we were forced to impose on ourselves due to the harsh reality at the time".

A large number of the new features to be included in the tax reform reflect this situation. Some of these new features were announced by the President of the Government, such as a change to the Income Tax structure that "will ease the fiscal burden - especially for those on medium and low incomes, and 12 million taxpayers will benefit" from the reform as from 2015.

Furthermore, those workers earning less than €12,000 per year will not be required to pay this tax, while family tax breaks will be increased by significantly raising the personal minimum thresholds for children and ascendants, as well as for care provided to persons with disabilities.

The President of the Government also mentioned the efforts to boost stable job creation by reducing social burdens. More specifically, he announced the creation of a flat-rate National Insurance contribution "with effect from today".

The measure, which will be approved on Friday at the Council of Ministers, will enable any company that seeks to hire more workers to do so in a stable fashion, regardless of their age, and only "pay National Insurance (for common contingencies) contributions of €100 per month - not a cent more - for the first 24 months".

Financing and internationalisation of companies

The President of the Government said that making it easier to hire and train workers is not enough; there is also a need to create jobs by encouraging the incorporation of new companies and the development of those that already exist. To that end, he announced that the Council of Ministers on Friday will also approve "a raft of laws to foster financing aimed at improving the liquidity of companies and strengthen non-banking finance for small- and medium-sized enterprises".

The Strategic Plan to Internationalise the Spanish Economy 2014-2015 will also be approved on Friday, "in which the public resources earmarked for supporting companies overseas are defined, with a view to them becoming as efficient as possible".

Regarding this commitment to the competitiveness of the economy, the President of the Government stressed that the public authorities cannot remain on the sidelines given the fundamental role they play in the Welfare State.

To that end, a Public Administration Legal Framework Act will be approved "to integrate specific and strict regulations on the institutional administration services for the first time" and to tackle the problem of late payments by drawing up figures on the average payment periods from each authority and making them public.

Press release



© La Moncloa - Government of Spain


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment