From "recommendations" we have gone to "obligations" as we read in the newspaper Expansión After Commissioner Almunia's warning that the Brussels councils are "obligations", the Government is doomed to continue with the adjustments, "however difficult they may be", as stated by the President of the Government.
This video explains what will be those measures that we have "recommended" to take
1. Raise VAT and Specials
Both the European Commission and the IMF propose raising VAT because this would imply "less distortion" than other tax increases. As recognized by the Ministry of Finance, they are studying raising the reduced rate from 8% to the general 18%. It is also claimed to raise the Special Taxes.
2. Unemployment benefit
The European authorities have pointed out several times that unemployment benefits in Spain are the highest and the longest in the entire OECD, which is why they urge you to modify them. The maximum period to receive these benefits is two years, and the minimum amount is 416 euros.
3. Autonomous communities
For a long time, the European authorities have targeted the autonomous regions due to their lack of control over spending. This year, the regions will have to reduce their respective deficits to 1.5% of GDP. Last year they closed with a deficit of 31,541 million, so the Treasury requires them to reduce it by 15,500 million.
4. Minimum retirement age
The Zapatero Executive approved in 2010 a pension reform that, among other things, gradually postponed between now and 2027 the minimum retirement age from 65 to 67 years. Brussels believes that it is an "important but not sufficient" step and calls for "speeding up" its implementation.
5. Labor reform
Facing the gallery, Brussels and Washington DC have welcomed the Spanish labor reform, but offer recipes to deepen. The EU, for example, believes that “the cost of dismissal for someone with a permanent contract is still high compared to that set for a temporary contract”.
6. Salary of officials
The 5% cut in civil servants' salaries in May 2010 marked the beginning of the end for Zapatero. But the IMF insists that the government undertake a second cut. At the national level, Rajoy and the Treasury discard it, but Madrid will make a cut based on the income of public employees.
7. Deduction for housing
Brussels has charged Rajoy for recovering the tax deduction for habitual residence, an initiative that aims to boost the real estate market, but the EU values that this strategy contributed to inflate the bubble. The Treasury acknowledged yesterday that it is studying the abolition of this incentive.
8. Control of accounts
With the aim of supervising the income and expenses of public administrations and avoiding excesses that increase the deficit, Brussels proposes the creation of an organism that protects the state accounts. Spain already has the Court of Accounts, which the Government intends to strengthen.
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