Free school textbooks for low-income families, reduced IVA on basic products such as staple foods, and self-employed persons on less than the minimum wage are exempt from income tax retentions are among the agreements Spanish president Pedro Sánchez has reached with the leader of left-wing Podemos, Pablo Iglesias.
Back from paternity leave and Parliament’s month-long holiday now that his prematurely-born twins are out of danger, Iglesias made his first port of call a meeting with the president to discuss ways of reversing some of the cutbacks and financial pressures brought to bear by the previous PP-led government.
Both men agreed to cut IVA on basic necessities, although it is not yet clear whether this will involve reducing the 4% bottom rate or adding more goods and services to the 4% bracket which are currently in the 10% mid-band or 21% top-levels.
They reached the ‘beginnings of an agreement’ to increase income taxes for people earning more than €140,000 a year, or €10,000 a month, which Iglesias assures ‘is not going to hurt them much’.
A cap on classroom numbers and a reduction in taxes relating to schooling are among the steps discussed towards reversing the cutbacks in education imposed by the former right-wing government.
Income tax will reduce for the self-employed on a sliding scale, with those invoicing less than a given amount – expected to be that of the minimum wage, currently €858.55 per month – being tax-exempt.
It has not been revealed how the scale will work, or whether it will directly affect retentions or merely be recalculated when quarterly or annual declarations are filed.
More thorny subjects, including increasing the 6% company tax or Impuesto de Sociedades on profits which some large firms pay, plus extra taxes levied on banks and on certain top-level financial transactions, were mentioned but shelved for the time being.
Burying the hatchet of two years ago when Iglesias and Podemos thwarted Sánchez’s earlier attempt to become president, the two leaders have confirmed they are not looking at a general election before the year 2020.
Iglesias says Sánchez’s agreements and receptiveness to key left-wing policies means he intends to remain a major government partner which would prevent any attempt by the opposition to force an early election.
Podemos’ founder says it is ‘not possible to govern Spain with just 84 seats’, which is all Sánchez’s socialist party holds out of the total of 350, but that with Podemos’ ongoing backing and that of other minority regional left-wing parties, there should be no question of Sánchez’s having to reapply for his job via the polling stations.
Other areas where the two leaders coincided ideologically included setting up a State museum on ‘historic memory’, dedicated to those who lost their lives or survived the horrors of Spain’s and Europe’s 20th-century wars and dictatorships, an end to Spaniards abroad having to apply in writing for their right to vote – a concept introduced in January 2011 which has led to mass abstention by Spanish people outside the country, of whom an estimated two-thirds live in non-EU countries – and Iglesias’ proposal for Spain to formally recognise the State of Palestine.