The Council of Ministers approved yesterday the extension for the next year of Budgets for 2018. It will be the third year in a row that these public accounts are in force, even for a few months. It is a project designed by the previous minister of Finance, Cristóbal Montoro (PP), and approved by the current holder of the department, the socialist María Jesús Montero. It is, in addition, the fourth extension budget in the last five years, a true reflection of the tremendous political instability that lives in Spain as from 2015. The extension will cause tensions of liquidity in the autonomous communities, which, when not being able to update the funds of the financing system, receive less resources than expected in the first months of the year.
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The reform of the Constitution, Zapatero will determine the Budgets for 2020, The public debt is low with 97.8% of GDP but away from the fulfillment of the goal committed to Brussels Brussels asks Spain not to spend 22,000 million, which will save interest Brussels presses Spain for a “stable Government” to approve budgets
the General Budgets of The State go through to be the main instrument of economic policy of a Government. But in recent years they have also become a symptom of political instability: four of the last five years have started with the public accounts extended by the difficulty of the Government of the day approved a project in the legal term. This uncertainty has limited the scope for action of the different officers and has delayed the adjustment of the deficit and the public debt.
The Council of Ministers approved yesterday the criteria for extending the accounts of 2018 for the second year in a row. “The General State Budgets are extended for the next year at the same terms contained in the Agreement of the Council of Ministers of December 28, 2018”, says the Treasury in a statement. Will be the most long-lived democracy and determine the performance of the next Executive for at least the first few months of the year, until the take over I managed to get ahead on new ones.
liquidity stress
Some autonomous communities have begun to warn that it will suffer liquidity problems and tensions of the treasury at the start of 2020. The regional administrations have made their forecasts for the next year with the revenue to which they had formally notified the Ministry of Finance. But to extend the public accounts, those resources will not come until the adoption of the new, something which is not expected before the end of may. So during the early months of 2020 the regions will only receive the income of 2018, far lower than they really correspond to an improvement of the economic situation, which fuels the collection. It is the same problem that is found, the Executive of Pedro Sánchez in 2019 and that led to the Treasury to commission a report to the State attorney to try to unclog the blockage.
The extension will also affect the sanitation of public accounts. Although the expenditure referred to in 2018 are lower, the approval of the decrees of the Friday social, the rise of pensions of 0.9%, which is scheduled for early January —as it constitutes formally the Government— and the rise of the salary of the officials hinder the fulfilment of the deficit target committed with the eu by 2020, a figure equivalent to 1.1% of GDP. To get closer to that goal, the Executive will have to approve over the next year adjustments, whether tax increases or spending cuts, by more than 9,000 million.
The cycle of carry-overs budget began in 2017. That year began with the accounts extended for the previous year by the difficulties of Mariano Rajoy to form a Government. It was not until the middle of that year, when it approved the public accounts ordinary of that year.
The stumbling block of the procés
The procés has also influenced the extension of the accounts of the last few years. On June 28, 2018, with six months of delay, approval of the General Budgets of the same year. The Rajoy Government decided to delay the processing of public accounts, which should start in September of the previous year, by the intensification of the pulse secessionist after the convulsive 1-0 in Catalonia. And although these accounts of 2018 were designed by Cristóbal Montoro, the minister of Finance, that more time has occupied the position and that he participated in the creation of more Budgets (15), a legal project was finally approved by the Government of Pedro Sanchez, who arrived at The Moncloa after the motion of censure.
The socialist failed to take forward the project by 2019, resulting in the electoral process. Now we will have to wait to next spring to see if it has reached a certain political stability that scope to Budgets.
A thousand Municipalities will amend the capital gains TAX in 2020
The Royal Decree-Law approved yesterday by the Council of Ministers includes the approval of the coefficients of the update of the values cadastral of urban real estates for 2020 as has happened in the last three years. This measure will allow 1.092 municipalities update the tax on real estate (IBI), its main funding source of its own, from the 1st of January. However, not all of these Municipalities will increase the tax: the update will also serve to some what reduce. “The ups and downs mean global together reach a 3%. The maximum increase does not exceed 5%”, explained yesterday the Ministry of Finance, through a press release. In the coming days, the Official State Bulletin (BOE) will publish a list of municipalities that raise or lower the IBI. The measure only affects real estate and urban only imply to the consistories who have asked. The mayors who have requested the update may only do so if it has been at least five years from the last assessment procedure. And only if there are large differences between market values and cadastral. The assessed value is approximately half of the market value. Taxes on housing —the IBI, the municipal plusvalia and the patrimonial transmissions— are among the highest of developed economies, according to the OECD, the think-tank of rich countries. In Spain, the collection of the IBI has increased by eight-fold since 1990.
safeguard Clause
on the other hand, the decree also sets out the extension of the safeguard clause of the pension. That is to say, guarantees the next year the maintenance of the regulations prior to the reform of the Social Security Law of José Luis Rodríguez Zapatero in 2011. The Government of Mariano Rajoy limited this clause until 2018, but Pedro Sánchez the extended 12 more months. The rule allowed workers dismissed prior to the reform of August 2011, access to a pension with the established conditions prior to the reform, or later as a result of ERE prior to the same. The extension will also allow some workers terminated with 54 or 55 years before 2011 can retire in the same conditions that had before the reform of Zapatero.
