Economic chief says Spanish households the winners from new tax cuts

The event, which is now in its fourth year, was attended by over 200 investors and firms from 15 different countries, and is geared towards promoting Spain as a hub for international business.

Mr Ferre Navarre also added that Spain was becoming an increasingly attractive proposition for international investment, noting that the structural reforms undertaken by the Government, aligned with increased transparency surrounding the public finances, were fuelling confidence in how the country conducts its business.

A cut in the corporation tax from 30% down to 28% in 2015—with a further cut to 25% scheduled next year-was also cited as further evidence that Spain is boosting its attractiveness and competitiveness in the global economy.

While the corporation tax cut is designed to attract investment to the country, tax cuts to personal income are likely to fuel the economy in the year ahead.

“The tax reforms will target 70% of working families in Spain, giving them more disposable income. We estimate that these tax reforms will inject € 9 Bn into the economy over the next two years. That is a significant amount.”

Should revenues exceed current expectations, the Government will pass on the bounty in the form of further tax reforms, according to Mr Ferre Navarrete. He also added that the Government had resisted international calls to increase the VAT rate, adding that consumption would play a key role in the continued recovery.

While fears about deflation are preoccupying politicians at European level, Mr Ferre Navarrete claimed that low inflation in Spain could be viewed in a positive light:

We see this period of low inflation as an opportunity for households to boost their spending power.”

Critics have accused the Government of offering a giveaway budget in an election year, having previously inflicted painful austerity measures on the electorate. That notion was rejected by Mr Ferre Navarre who stated:

“We are providing these reforms in 2015, because now is the time that we are able to do it”.

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