Spain eyes overhaul of tax, labour market and pensions

To be eligible for EU funding, Spain must meet some strategic goals. [EFE/ Stephanie Lecocq]

The Spanish government wants to implement a series of extraordinary measures in the coming months so as to be eligible for EU funding, including changes to tax laws and reforms of the labour market and pension system. EURACTIV’s partner EFE reports.

The government coalition of socialist PSOE and left-wing United We Can (Unidas Podemos) this week unveiled the details of the recovery, transformation and resilience plan sent to the European Commission, which is divided into 30 different areas.

If Spain accelerates the roll-out of ambitious structural reforms, it could receive the first of two or three tranches of a total of €140 billion from the EU recovery fund by the end of the year. Half of the money, to be paid out over the next three years, will come in the form of grants, the rest as loans.

Madrid approved in April a €70 billion recovery plan to be funded with EU resources, which has the long-term aims of shifting the country’s economy away from over-reliance on services and boosting digitalisation.

However, to be eligible for EU funding, the country must meet some strategic goals.

Spain makes plea for 'flexibility' in EU recovery plan

The Spanish government is seeking “flexibility” from Brussels on the sensitive topic of state aid to help battered companies hit by the COVID-19 crisis as the government will disclose next week details of its recovery plan (Plan de Recuperación), EURACTIV’s partner EFE reports.

More taxes on the horizon

By the end of 2022, the recovery plan foresees a new pension rebalancing system so that  retiring older generations will not overburden the young.

A new payment mechanism for toll roads will also be introduced from 2024, though the system will not be extended to all roads in the country, El País reported.

Labour market reforms are another key aspect of the plan submitted to Brussels. Spain plans to reduce the variety of contracts from the current three models and reduce subcontracting systems. Stricter regulation of temporary structural lay-off schemes will also be introduced, financed with contributions from companies, workers and the public administration, the Spanish daily reported.

Meanwhile, the country’s tax system is also set for a transformation, including an overhaul of aviation tax “in order to act on emissions,” the plan reads.

Modernising the tourism sector is also among the plan’s major goals. It foresees the creation of more than 100,000 new jobs in that industry, which accounts for 14% of Spain’s GDP.  

[Edited by Paula Kenny, Daniel Eck and Josie Le Blond]

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