Debt forgiveness for the CCAA, increasing the youth rent bonus, free public transportation… Sánchez's economic promises

Pedro Sánchez has taken advantage of the first day of the investiture session to announce a battery of commitments in economic matters if he manages to revalidate the presidency. Among other measures, the now acting president has promised to forgive part of the regional debt, increase the youth rental bonus or make public transportation free for young people, minors and the unemployed.

In addition, the candidate for the investiture has announced that he will extend the VAT reduction on food until June 2024, that he will expand the scope of the mortgage relief measures to households with incomes of up to 38,000 euros per year or that he will raise the SMI every year. years so that it remains at 60% of the average salary.

Given the foreseeable impact on public accounts that an economic package such as the one proposed by the acting president would have, Sánchez will burden the fiscal costs on the richest.. “The rich, sorry, have to pay more taxes. As long as we govern, they will pay more than now,” Sánchez warned from the tribune of the Congress of Deputies.

During his first intervention, Sánchez has outlined eight priorities for a future Government, many of them with a marked economic content.. Among the newest, the extension of the VAT reduction on certain essential foods until June 2024 stands out. This measure was introduced for the first time in January 2023 and has been in force since then.. With food still 9.5% more expensive than last year, the socialist leader has promised to extend the tax reduction also until the middle of next year when the pressure on the price of the shopping basket is expected to ease.

However, Sánchez has not made any mention of a possible extension of the tax reductions on the electricity and gas bill, which if nothing is done to remedy it, will decline on December 31.. The higher cost of this measure and the repeated warnings from Brussels not to extend energy support make it difficult to maintain them.

The acting president has also committed to making public transportation free for young people, minors and the unemployed.. A measure that is already included in the budget planning that the acting Government sent to Brussels in October, but only with regard to the state network (mainly commuter and medium-distance trains).. However, the bulk of the public transportation network is in the hands of autonomous communities and local entities, largely in the hands of the PP.. Without your support, Sánchez's promise will be difficult to achieve.

In terms of housing, the candidate for investiture has committed to increasing the amount of the youth rental bonus, currently set at 250 euros per month.. The president has not gone into more details, but compliance with this measure will also be conditioned by the disposition of the regional governments, which are responsible for granting aid and setting income limits.. Furthermore, the acting president has recovered the promises he already made during the electoral campaign.. Among the most notable, building 183,000 public homes for affordable rental, or 20% mortgage guarantees for young people so that they can access the purchase of a home.

For those who already have a home and have found it difficult to pay for it, Sánchez has promised to facilitate access to mortgage relief measures for middle-class families.. A measure that was already reflected in the government agreement between PSOE and Sumar. To achieve this, it has committed to expanding the income limit allowed to families of up to 38,000 euros of annual income (the current limit is 29,400 euros).. This mortgage relief is reflected in two codes of good practices that allow the most distressed households to access grace periods in the payment of the principal of their debt and extensions in the life of the loans.

In addition, the president has reiterated already known commitments such as raising the minimum wage every year so that it remains at 60% of the average salary; the reduction of the maximum legal working day from 40 to 37.5 hours per week; achieve full employment; reinforce the minimum vital income and simplify access requirements so that more households can benefit or continue revaluing pensions in accordance with the CPI. He has also proposed the creation of a family farming law to support small farmers, reinforce food aid and scholarships, fewer university fees, more funding for research or better working conditions for scientists.

Forgiveness of regional debt

At the level of public finances, the president has committed to a “new financing model” that guarantees the resources of the autonomous communities. Sánchez has pointed out that during the years of the crisis the “cuts in the welfare state” left many communities without resources and forced them into debt.

For this reason, together with the reform of the financing system, the socialist leader has promised to “assume part of the debt of the autonomous communities contracted during the PP stage”. The acting president has indicated that the measure will be “applicable to all autonomous communities regardless of political color” and whether or not they are covered by the Autonomous Liquidity Fund (FLA).

In principle, this would expand the range of debt relief to the entire autonomous spectrum (including Madrid, the Basque Country and Navarra), although the conditions that would apply to each community are still unknown.. For the moment, the PSOE has agreed to forgive 20% of the regional debt in the hands of the State for Catalonia and Galicia, but this percentage does not necessarily have to be applicable to the rest.

Regarding the fiscal measures that a new socialist Government would adopt, Sánchez has limited himself to pointing out that he is “committed to the public deficit” and that he will broaden the tax bases, seek to bring about the underground economy, expand the progressivity of personal income tax and promote the minimum of 15 % in corporate tax on accounting profit. Nor has he specified what will happen with the tax on the rich, on banks or on energy companies, which in principle are designed to be temporary. In any case, Sánchez has made it clear that the tax pressure for the highest incomes will rise again if he repeats in Moncloa.