Meeting of the Basque Finance Council on October 11, 2017

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Economy

BASQUE COUNCIL OF FINANCE

AGENCIES | DRAFTING

The Basque Finance Council has also agreed on the collection forecast for 2018, which with 14,391 million euros is very similar to the sum of income forecast for this year.

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The Basque Haciendas will close the year with a collection of 14,367 million euros, which – discounting the effect of the regulatory changes in VAT – represents an increase of 269 million euros (+ 4.7%) compared to what was expected. Basque institutions expect a similar collection for 2018.

This forecast of the closing of collection for this year has been set by the Basque Government and the Provincial Councils of Álava, Gipuzkoa and Bizkaia, and the City Councils of the CAV at the meeting of the Basque Council for Public Finance (CVFP) held this Wednesday in Vitoria -Gasteiz.

In the meeting of the Basque Council of Finance they have achieved various agreements, including a commitment to agree on a new Contributions Law in 2018, although both the Basque Government Minister of Finance, Pedro Azpiazu, and the three general deputies, have assured that at the meeting has not been treated the theme of tax reform in which the provincial governments of the three territories work.

The Basque Government and the councils have set the collection closing forecast by concerted taxes for this year, which amounts to 14,367 million euros. This figure is 869 million more than that foreseen in the Budgets of the Basque Country this year, and is the highest obtained so far, above the 13,772 million euros collected in 2007.

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However, 600 of these 869 million euros of increase are due to the VAT adjustments introduced this year, so they do not correspond to the real evolution of the economy. If the impact of this situation is discounted, the increase with respect to the budgeted income would be 4.7 percent.

By territories, the revenue forecast for this year amounts to 7,144 million euros in Bizkaia; 4,449 million, in Gipuzkoa; and 2,174 million, in Álava. The bulk of the collection of the foral estates corresponds to VAT (5,943 million euros) and personal income tax (slightly more than 5,000 million). Income from Corporate Tax will total 1,142 million euros.

Negotiation for tax reform continues

It was not on the agenda, however, Tax Reform, which continue to negotiate PNV and PSE-EE and that each time seems closer to not bringing with it a drop in the Corporation tax.

Regarding the tax reform, the agreement between PNV and PSE-EE does not give the impression of being close. Both parties continue negotiating, but it is possible that the companies of the CAV will continue to apply a nominal rate or rate of 28%. The general deputy of Bizkaia, Unai Rementeria, recalled that the jeltzale proposal raises a reduction of 3 or 4 points in corporate tax, but the Socialists do not accept it, so that the agreement, if produced, would have to come through of other measures. The Basque Government spokesman, Josu Erkoreka, did not hide these differences at a press conference this Tuesday, but emphasized that they will persevere “until the end” in the talks.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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