Spain’s PSOE-Podemos government approves 2022 anti-worker budget
Spain’s coalition government of the Socialist Social Democratic Party (PSOE) and “leftist populist” Podemos approved the outline of its 2022 budget. The project received the green light from the Cabinet last Thursday and is going to Congress for debate more in-depth.
Described in the Spanish media as “the biggest public spending effort in the history of Spain”, it offers 40 billion euros of investment. About € 27 billion of the planned funding is expected to come from the European Union (EU) Next Generation EU and React-EU coronavirus rescue plans.
More than 100,000 people have died from COVID-19 in Spain, hundreds of thousands have suffered from a long-lasting illness and nearly 5 million have been infected, more than 10% of the population. Millions of workers have seen their livelihoods destroyed: 2020 saw record job losses and the biggest drop in Spain’s gross domestic product (GDP) since the Spanish Civil War of 1936-1939.
Poverty has skyrocketed in Spain, with severe material deprivation rates rising from 4.7% in 2019 to 7% last year, according to a July National Institute of Statistics (INE) survey. That means 3.3 million people face a severe shortage of basic necessities like heat, nutritious food and a telephone, INE reported.
“This budget was made so that the recovery reaches everyone and widens the middle class,” Finance Minister María Jesús Montero said after Thursday’s cabinet meeting. “We have to move forward and be in a better place than before,” she said. “Six euros out of 10 of this budget are intended for social policies. “
Despite rhetoric from the PSOE, Podemos and allied media, the budget will not address the rapidly worsening social crisis caused by the pandemic. The draft plan is a list of half-measures and empty promises, which will mainly benefit the financial aristocracy and the well-to-do upper middle class, while leaving millions of workers in dire straits.
Among the measures is a proposal to increase civil servants’ salaries by 2%. However, INE data shows that Spain’s 12-month inflation rate peaks at 4% in 13 years, which means that the proposed “raise” is in fact a pay cut. Private sector workers won’t even have that.
The budget also includes an agreement for a minimum corporate tax rate of 15 percent. The tax change will affect around 1,070 companies in Spain (less than 1% of the total). While in theory the corporate tax rate in Spain is 25 percent, many companies pay significantly less through tax deductions and exemptions. Speaking recently to Financial Times, Finance Minister Montero admitted that many large companies currently pay as little as 6% in taxes, while many small businesses pay 19%, adding: “you cannot have this regressive tax engineering”.
The fiscal proposal in the budget does not add anything new. In reality, this is leading Spain to align itself with an agreement reached by the chief financial officers of the G20 countries in July to impose a minimum global corporate tax of 15%, in order to prevent multinational companies from shifting their profits. towards tax havens with low tax rates. Many businesses will continue to pay much less than the nominal corporate tax rate in Spain.
The budget was delayed by two weeks, allegedly due to disagreements between the PSOE and Podemos which were resolved after coalition partners agreed to include the 15% tax floor, as well as a new law on the lodging.
The flagship measure of the budget is a housing bill, which has been variously presented as a “controversial” or even “radical” plan. It is a fraud. The new law – which would introduce minor rent controls and provide minimal investment in social housing, while providing tax benefits to landlords – could do next to nothing to ensure access to affordable and good quality housing in Spain. .
Landlords would face a cap on how much they can raise in rent each year, but only if they own more than 10 properties, leaving many tenants unprotected against rising rental costs. Meanwhile, owners of nine or fewer rental units would be offered tax breaks of up to 90% if they voluntarily decided to lower rents.
Taxes would also be increased by an unspecified amount on vacant properties, and real estate developers would be required to reserve 30 percent of public housing inventory for rent, rather than making it available for purchase at a reduced cost. With around 1.5 million affordable rental units for low-income households needed in Spain, this is largely insufficient to meet the country’s housing needs.
A key measure of the housing bill is a proposal to grant monthly allowances of € 250 to young people aged 18 to 34 who earn less than € 23,725 per year, to help them leave the parental home and cover rental costs. The monthly payment would be available for a maximum of two years, with total financial assistance limited to € 6,000. There are almost 600,000 low-income tenants in this age group in Spain. Due to the high cost of living and low wages, the average age at which Spaniards leave the family home is 30, almost four years above the European average.
With the average salary of a young person in Spain of just € 970 per month and monthly rental fees in big cities like Barcelona of almost € 1,000 on average, this meager payment will still leave many young people unable to pay the rent. . Young people in Spain are one of the most precarious and exploited sections of the working class: the youth unemployment rate is around 33%, the highest in the euro area. Meanwhile, half of the young Spanish employed have temporary contracts; 26 percent have part-time contracts.
The main points of the draft housing legislation cannot be legally implemented by the national government and would be implemented by regional authorities. The opposition Popular Party (PP) has already refused to apply the law, calling it “suicidal interventionism”.
PP leader Pablo Casado said his party would challenge the legislation in the Constitutional Court if it got parliamentary approval. The PP governs five of Spain’s 17 regions (Andalusia, Madrid region, Galicia, Castile and León and Murcia), as well as four major cities (including Madrid), which means that the legislation, if passed, would be sterilized at birth.
There is no guarantee that the budget will be approved. The government only holds 155 seats out of 350 members of parliament, 20 less than the required majority. It relies on regional parties such as the Republican Left of Catalonia (ERC), with 13 seats, the Basque Nationalist Party (PNV – six seats), the Basque separatist EH-Bildu (five seats) and the Catalan independence party. European Democratic Party (PDeCat — four seats).
While these parties helped the PSOE-Podemos government pass its 2021 budget last December, most importantly, the ERC has indicated it may not vote in favor of the budget this year. ERC spokeswoman Marta Vilalta said on Monday that the ERC was “a long way off” from being able to support the budget, adding: “It is not because the ERC allowed the approval of the budget. last year we will do it again this year. “
There is nothing progressive about this PSOE-Podemos austerity budget. The “leftist populist” Podemos is a pro-capitalist party whose record in government shows that it will do nothing to prevent the influx of profits into the coffers of banks and large corporations. Workers must break the straitjacket of Podemos and its pseudo-left satellites as part of an independent struggle of workers and youth for socialism in Spain and around the world.