Government control session in the Upper House of Parliament

Mariano Rajoy says the most effective policy against inequality is the fight against unemployment

2015.5.26

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Upper House of Parliament , Madrid

During the government control session in the Upper House of Parliament, Mariano Rajoy said that a recent report by the OECD and experts on the matter show that job losses are the main cause of inequality. This was the reply given by the President of the Government to the Member of the Upper House for the Socialist Parliamentary Group, María Victoria Chivite, following a question about the government's inequality policy.

The President of the Government argued that the 80/20 indicator, which establishes a comparison between the 20% of the population with the highest incomes and the 20% with the lowest, worsened from 2007 as a result of the decisions taken during the previous legislature that led to 3,400,000 Spaniards losing their jobs. "We have yet to receive the data on 2014 and 2015 but, given the figures on economic growth and job creation, I am convinced that these indicators will improve and, by extension, so will the inequality situation", he said.

Mariano Rajoy recalled that, in 2014, employment rose in Spain for the first time in seven years and 440,000 Spaniards found work, that the Labour Force Survey (Spanish acronym: EPA) on the first quarter of 2015 shows that there are 504,000 more Spaniards in work than last year and that, in April, there were 578,000 more people registered with the Social Security system than in the same month in 2014.

The President of the Government also quoted other figures that, in his opinion, reflect a change in trend: the number of households where all members are unemployed has fallen by 185,000 according to the latest EPA; the number of people who have been unemployed for over a year has fallen by 247,000; and 99,300 young people under the age of 24 have found a job in the last year. "From negative growth and recession, we have moved to positive growth and job creation. It is also important to note that, of the 504,000 jobs that were created last year, 60% of them are permanent and that the temporary employment rate now stands at 23.6%", he said.

In his opinion, what needs to be done now is to persevere with those policies that create jobs because it is the most effective way to combat inequality. He particularly mentioned the extension of the Prepara Plan, the signing of a new benefit for the long-term unemployed with the CCOO and UGT trade unions, the tax reform, the maintenance of social policies, the Regional Liquidity Fund and payments to suppliers.

Higher revenue, lower taxes

Mariano RajoyPool MoncloaWhen asked by the Member of the Upper House for the Entesa pel Progrés de Catalunya Parliamentary Group, José Montilla, about a possible change to the cultural VAT, Mariano Rajoy said any such decision would depend on revenue.

The government's "philosophy", he explained, is to try and lower Personal Income Tax (Spanish acronym: IRPF) and Corporate Income Tax "and, if possible, VAT as well". "If revenue improves, as it has been doing this year, we can take decisions on this issue", said Mariano Rajoy. The President of the Government argued that "as long as economic growth and job creation continue, we will collect more revenue" and underlined the need to continue meeting the public deficit targets.

Mariano Rajoy recalled that this deficit stood at 9.1% of GDP when he took office as President of the Government and Spain was experiencing considerably difficulty in its attempts to finance itself. This situation "forced us to take decisions that were tough, difficult and not in our manifesto", such as raising Personal Income Tax and VAT (albeit maintaining the reduced rate, he said, for certain cultural products such as books and museum tickets).

The President of the Government predicted that the public deficit will have fallen by half at the end of this year from where it stood in 2011 - a reduction that he believes was compatible with maintaining basic public services.

He also stressed that, following the initial tax increases, a selective reduction was applied in 2013 for SMEs and the self-employed while Personal Income Tax and Corporate Income Tax were lowered in 2014, a reform that came into effect this year and "the second part of which will take effect" in 2016.

Investments in the Canary Islands

Mariano RajoyPool MoncloaIn response to a question from the Member of the Upper House for the Mixed Group, María del Mar del Pino Julios, about spending cuts and the suspension of public works in the Canary Islands, the President of the Government replied it had been necessary to set priorities.

In this regard, he said that 70 billion euros were lost between 2008 and 2009 in Spain as a result of falling economic growth and job losses, which required "us to tighten our belts and contain spending". "My priority was not our roads and trains; my priority was to maintain pensions, unemployment benefits and the most important basic public services".

Mariano Rajoy stressed that the Government of Spain is not punishing the Canary Islands or any other region. He recalled that the State has allocated close to 1.5 billion euros in investment to the Canary Islands and that agreements are in place on roads, railways and transport subsidies.

The President of the Government recalled that, despite the fact that roads in the Canary Islands fall under the remit of the regional government, the State has contributed 2.3 billion euros to the region since 1994 for such works. Furthermore, he explained that the reduction in road investments in Spain as a whole was 6% higher than the reduction in the Canary Islands. He also said that the islands benefit greatly from the conditions contained in the Canary Island Fiscal Economic Regime.