Spain to Raise Taxes on Companies and the Rich in Draft Budget

(Bloomberg) -- The Spanish government is aiming to rebuild its pandemic-ravaged economy by raising taxes for companies and the wealthy, according to a draft budget set to be approved by the cabinet on Tuesday

The government’s financial plan for 2020 will include increases in corporate and wealth taxes, as well as higher income taxes for the richest Spaniards, Prime Minister Pedro Sanchez and his deputy, Pablo Iglesias, said at a press conference before the cabinet meeting in Madrid.

The increased revenue will help fund higher salaries for public workers and for public pensions, and more spending on health care, education and infrastructure, the two leaders said. The governnment is due to release more details following the meeting.

Once the governing coalition approves the plan, Sanchez still faces a battle to get it through parliament, where he controls only a minority of the lawmakers.

The run-of-the-mill process of passing an annual budget has become a highly complex business in Spain over the past five years as the country’s political divisions produced a series of weak minority governments. Sanchez’s first term in office ended with a snap election last year when he failed to win support for his budget, and he has been governing since with a 2018 spending program which has twice been rolled over.

If he succeeds this time, it will be only the second budget the parliament has approved since 2015.

The proposal due to be approved by the cabinet required weeks of negotiating between Sanchez’s Socialists and the left-wing group Podemos, led by Iglesias, as well as with smaller parties who will be needed to form a majority.

With the Spanish economy facing its deepest recession in living memory following the coronavirus lockdown, Sanchez is waging his political future on using European Union recovery funds to drive the recovery.

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