Spain sent the budget plan, which projects a deficit of 7.7% and an economic rebound of at least 7.2% as previously announced, to the European Commission late on Thursday.
This year, the government expects a recession of 11.2% – the worst since the civil war – and a budget gap of 11.3% due to the impact of the coronavirus pandemic.
Parliament has already given its green light to the implementation of the two more controversial taxes. The so-called Google tax on revenues booked locally by large tech firms such as Google, Amazon and Facebook is being adopted across Europe. Washington sees such a tax as a threat to U.S. companies.
The 3% tax on digital services, such as advertising and data sales, is projected to collect around 1 billion euros in 2021.
The financial transactions tax, known as ‘Tobin tax’, is another European project, led by the German government, and is expected to raise 850 million euros next year in Spain. A 0.2% rate would be applied to transactions of shares of listed companies with a market cap higher than 1 billion euros.
In the context of shrinking tax revenues and record public spending to counter the impact of the pandemic, Spain also plans to create or raise other taxes for potentially harmful products.
It will hike value-added tax on sweetened beverages to 21% from 10%, expecting to collect 340 million euros in 2021, and to raise 1.8 billion euros from various ‘green’ taxes, such as a tax on plastic packaging.
The Socialist-led minority coalition government hopes parliament will approve the first full-year budget since 2016 after a long period of political instability. Spain had to roll over its budgets for most of the past four years, all but preventing public investment.