Spanish business fears the economic policy of new government in waiting

AT the time of writing, it is assumed that the PSOE/Podemos coalition will receive sufficient support from smaller parties to form a viable Spanish government.

This is of particular interest to business interests and a number of associations representing both companies and the self-employed are already sharing their fears for the future of the Spanish economy.

CEOE and Cepyme have stated that the government program already announced is likely to discourage future investment and job creation.

The PSOE and Podemos believe however that their plans will generate more income for the State which will in turn allow them to increase minimum wages and pump more money into the economy through consumer spending.

They plan to repeal certain reforms passed by the previous government, increase Corporation Tax from 15 per cent to 18 per cent for banks and oil companies and apply a new 15 per cent tax on undistributed profit from the recently introduced Socimis (Real Estate Investment Trusts).

Another decision is to implement a ‘GoogleTax’ which will allow the Spanish Government to properly tax profits earned in Spain by mainly American multi-nationals such as Amazon, Facebook, Google and Microsoft rather than let them transfer the income through holding companies to cheaper tax areas.

As already noted, the Irish and Dutch loophole is being closed but there are still ways for these companies to repatriate funds which could be taxed, but France has already been threatened with massive trade tariffs by the USA for imposing a similar tax, so this could be a double edged sword.