Public accounts for 2015 drive economic growth, job creation and improve competitiveness

This Budget very much remains in line with the policies that this government has been implementing since it came to office, the results of which have now enabled taxes to be lowered, which will come into effect as from next January.

The 2015 Budget, which will begin its passage through Parliament as from today until its final approval in December, revalidates the content of the three previous budgets that the government drew up and which sought to open the doors that were firmly closed on Spain at that time: confidence and credibility.

Spain has shown itself capable of working as a unit in overcoming difficulties; it has taken up the mantle of discipline, austerity and cost containment, it has committed to undertaking important structural reforms and has imposed measures to come out of the recession in which it was firmly entrenched.

The Spanish economy is now much more flexible, more dynamic and more competitive. There is once again confidence from international institutions and investors and Spain is no longer in the spotlight of the international economy thanks to the reforms undertaken. The challenge facing Spain now is to reach levels of growth that allow it to recover the levels of income and employment that existed at the start of the crisis.

This more favourable economic environment thus allows this Budget to include new elements precisely to support growth and job creation; as such it seeks maximum efficiency in the use of resources and optimised use of EU funding granted to Spain for the new period 2014-2020. It also incorporates the effects of the tax reform that will increase levels of household income and thus help boost domestic consumption.

Hence, this is a budget of continuity, which requires further development of the structural reforms and fiscal consolidation in order for the State deficit not to exceed 2.9% and for the social security system to close the year with a deficit no higher than 0.6%.

Noteworthy is that, for the first time, the economic forecasts on which the budget has been based include backing from the Independent Fiscal Responsibility Authority, thus complying with EU guidelines.

Revenue

Total non-financial revenue for 2015, following the allocations to regional governments will amount to 133.71 billion euros, a 4.3% increase on the 2014 Budget.

Tax revenue before allocations to the regional governments will amount to 186.11 billion euros in 2015, 3.5% up on 2014. By tax heading, Personal Income Tax revenue will fall by 0.3% on the 2014 Budget to 72.96 billion euros, since the improvement in the tax bases will be offset by tax reductions.

In terms of Corporate Income Tax revenue, a 5.6% increase will be recorded to a total of 23.58 billion euros. VAT revenue will rise by 9.9% to 60.26 billion euros while revenue from special taxes will fall by 2.7% to 19.89 billion euros.

Expenses

Total ministerial expenses will fall by 5.1% in 2015 to 62.5 billion euros, including social security and public employment service transfers. Discounting these transfers, the expense available for ministerial departments would only fall by 0.2% on this year.

This expense includes 450 million euros from the budget earmarked for investments in the Plan to Drive Growth, Competitiveness and Efficiency (Plan CRECE), with an allocation of 2.19 billion euros, of which almost half will go towards SME initiatives and financial instruments.

On another note, 231 million euros have been allocated to finance the repayment in 2015 of one-quarter of the Christmas bonus for public servants, which was suspended in 2012.

Social spending

Social spending has been increased by 0.7% on 2014. Discounting the item earmarked for paying out unemployment benefits, which in 2015 will be lower as a result of the positive development of the labour market, social spending will increase by 3.7% on 2014. 25.3 billion euros are forecast for these benefits, which is a 15% decrease on the initial budget for 2014.

The bulk of the social spending in the 2015 consolidated Budget has increased from 52.7% in 2014 to 53.9% in 2015. In total, this item already amounts to 187.41 billion euros compared with 186.05 billion euros in 2014.

Similarly, spending on social services and social promotion will be 5.1% more than in 2014, at 1.94 billion euros.

Occupational pensions

The item earmarked for financing occupational pensions in 2015 amounts to 115.67 billion euros, which represents an increase of 3.57 billion euros (or 3.2%) on the amount in the initial budget for 2014.

In order to determine the provision for occupational pensions in 2015, the increase in the number of pensioners, the change in the average pension and the top up of 0.25% have all been taken into account.

In turn, civil service pensions will rise by 4.3%, to a total of 13.19 billion euros.

Active policies

As mentioned previously, the creation of quality jobs and the fight against unemployment are the main objectives of the government's economic policy. Hence, the new public accounts for 2015 also prioritise active employment policies, with a provision of 4.75 billion euros, 16.5% up on 2014.

This rise principally corresponds to the increase in the provision for discounts on hiring, for an amount of 278 million euros, 22.8% up on 2014.

Education

The education policy has a budgetary provision of 2.27 billion euros, 4.5% up on 2014, with two fundamental budgetary focuses: improving the quality of education and guaranteeing equal opportunities.

The programme of grants and aid for students represents 64.7% of the total, with a provision of 1.47 billion euros. Within this programme, the provision for grants and study aids of a general nature amounts to 1.41 billion euros, an increase of 0.2%; this represents an increase of 250 million euros on the budget for 2014, making this the highest allocation on record.

143 million euros have been allocated to implement the LOMCE [Constitutional Law to Improve Quality of Education]. In line with the general aim of improving the quality of the education system, 22 million euros have been allocated to boost the quality of education centres.

Culture

749 million euros have been allocated under the budget for culture, a 4.3% increase to support and guarantee the operation of the major institutions and cultural services. In this regard, the budget for bodies reporting to the Ministry of Education, Culture and Sport amounts to 489 million euros, a 20-million euro increase on 2014.

Lower taxes and support for families

Just as the government undertook to its citizens, the 2015 Budget provides for lower taxation. The main aim of the tax reform is to drive economic growth and job creation, as well as to make the tax system fairer, with the most significant tax reductions for those taxpayers with the least resources and increased social benefits for the most needy groups.

The reform distributes the tax burden of direct levies, increases disposable income for families, promotes savings and investment, and improves the competitiveness of the Spanish economy, while not raising VAT, which would be counter-productive for the aim of increasing consumption.

The average Personal Income Tax reduction will amount to 12.5%. 72% of taxpayers - 14.4 million people - with income of lower than 24,000 euros, will enjoy a reduction of 23.5% while 1.6 million will cease to be taxpayers. Salaried workers that earn less than 12,000 euros per annum will not be obliged to make a tax return and will enjoy their full wage as from next year.

The reform will return some 9 billion euros to taxpayers and companies over the course of the next two years, as from January 2015, and introduces major incentives for groups that require the greatest protection, such as families, those requiring care and taxpayers with people in their care.

Immigration

The allocation for immigration amounts to 41.4 million euros, an overall increase of 13.8%. Worthy of mention is the significant increase of 65.7% in humanitarian aid for immigrants, as a result of the exceptional situation in the last few months of 2013 and the first months of 2014.

Plan CRECE

The Plan of Measures to Drive Growth, Competitiveness and Efficiency (Plan CRECE) defines a raft of 40 measures to drive growth and the competitiveness of the economy, loans and the fight against unemployment. One of the main aspects is its compatibility with the fiscal consolidation target, since it optimises the use of readily available resources and, in particular, the use of EU funding in collaboration with the regional governments, such that part of the resources allocated to the regions can be managed in coordination with State resources in order to avoid duplication and ensure the maximum return from investments.

Furthermore, the public resources will be allocated to the areas of greatest interest to our economy, such that private investment is incentivised and the impact of these recourses is boosted. A total of 2.19 million euros will be allocated to this end.