Spain’s Sanchez Tells Brussels He’ll Raise Billions in Taxes

Spain’s government intends to increase taxes by more than 20 billion euros ($22.5 billion) during the next several years if Socialist Pedro Sanchez secures the support he needs in Parliament to serve a second term as prime minister. Sanchez sent his four-year economic plan to European Union officials late Tuesday night, forecasting a 2.2 percent increase in GDP this year and 1.9 percent next year. He also pledges to increase taxes by 5.7 billion euros in 2020, as he had previously laid out his 2019 budget. That proposal was rejected by Parliament earlier this year, triggering a snap election. Sanchez’s Socialists won the greatest number of parliamentary seats in Spain’s national ballot on Sunday and he looks set to cobble together enough support to govern again. The tax increase would be used to fund a boost to social spending and to narrow Spain’s budget deficit from the 2 percent Sanchez’s economists forecasts for 2019 to 1.1 percent in 2020.

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the question of all questions: how to find the middle between socialism and capitalism

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Just now, Pavel said:

the question of all questions: how to find the middle between socialism and capitalism

Oh, boy..It's already exist. In Scandinavian countries...

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Interesting elections, without "winer". Spain's Socialists win election as far-right enters parliament for the first time since Franco ... So, a compound of two extremes...

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1 minute ago, pinto said:

Interesting elections, without "winer". Spain's Socialists win election as far-right enters parliament for the first time since Franco ... So, a compound of two extremes...

Yep. No one has won a sufficient number of seats to be able to piece together a government

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the problem of Spain is parallel to the problem of Greece  (and also Italy).  These countries do not have control over their monetary policy, in that they are using the Euro.  Spain needs to devalue its currency relative to the trading partners (and the tourists from the UK); it cannot as it is welded to the Euro.  If Spain were on the peseta, it could devalue by say 15% and the sales of Spanish goods and services abroad would yield "free cash" when sold abroad. 

For example, let us posit a case of Spanish wine that is sold today for 10 Euro a bottle.  The Peseta devalues by 15%; that bottle of wine, sold domestically, would yield the equivalent of 8.50 euro.  But if the exporter sells it into Europe, then the producer gets that 10 Euro.  The windfall is a function of the exchange rates.  All that extra cash injected into the Spanish economy will dramatically stimulate economic activity, lower unemployment, and ease govt outflows for social services - and thus lower budget strains on the government.  You don't need tax increases if you (the government) end up spending less. 

The people in Brussels are enamored of the Euro.  The original idea was to develop certainty in commercial transactions, thus lubricating commerce.  It did that.  Now the deficiencies of this crimp on monetary policy is becoming apparent.  I suspect the Euro is going to have to be abolished for the Outer Rim countries; they are just too weak to handle the Calvinist restrictions of German bankers. 

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13 hours ago, Pavel said:

the question of all questions: how to find the middle between socialism and capitalism

There is no middle. It is a dynamic situation that usually ends up in economic collapse resulting in a tyrannical government once the government is too big. People love the allure of free stuff, but then they have no freedom. Eisenhower said if you want housing, food, and care you will find it in prison. 

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