The Spanish government recently announced that by 2021, public revenue will increase by 33.4 billion euros. The main reason is that gross domestic product (GDP) will rebound sharply and new fiscal measures will be introduced, including the introduction of a "plastic tax" and higher taxes in some areas.

New tax policy will create 6 billion euros in revenue

According to reports, the new crown virus crisis has caused a "destructive" impact on the Spanish economy, but the Spanish government predicts that economic development will soon usher in light.

Affected by the epidemic, the Spanish government temporarily shelved the original "financial reform" plan, but, as announced by the former Finance Minister María Jesús Montero, there will be tax adjustments next year.

According to the fiscal plan, these tax adjustments will increase the government's fiscal revenue by 6.8 billion euros next year and 2.3 billion euros in 2022.

Excluding the revenue from the new law to combat tax fraud (this tax is expected to bring about 830 million euros per year), it is expected that the tax change will generate about 6 billion euros in revenue by 2021, which will increase to about 6 billion euros in the next two years. 8.4 billion euros.

The new "plastic tax" will bring in 491 million fiscal revenues

Spain’s fiscal budget plan includes an increase in "green taxes." Many institutions, including the European Commission, the Bank of Spain, and the Organization for Economic Cooperation and Development (OECD), have recommended the use of green taxes to provide a source of funding for economic recovery. In Spain, the contribution of such taxes to GDP is 1.8%, which is lower than the EU average of 2.4%.

Spain's fiscal budget plan involves 1.3 billion euros in revenue from environmental taxes in 2021. Among them, it specifies the tax on disposable plastics, and this tax will create 491 million euros in fiscal revenue next year.

In addition, Spain will also introduce a new digital service tax next year, usually called "Google tax", and tariffs on financial transactions called "Tobin tax." It also plans to increase the sales tax (VAT) for sugary and artificially sweetened beverages from 10% to 21%.

Spain's GDP will grow by 7.2% next year

The Spanish government expects GDP to fall by 11.2% in 2020, and is expected to rebound by 7.2% next year. Together with funding from the European Anti-epidemic Fund, this growth rate may increase. If the first batch of more than 25 billion euros of rescue funds is injected, it will help GDP growth by 9.8% in 2021.

Thanks to these additional funds, the Spanish government spending ceiling in the coming year will be raised to nearly 54%, reaching 196 billion euros; on the other hand, debt will fall from 118.8% of GDP in 2020 to 117.4% in 2021.