Pedro Sánchez Presents Economic Commitments in Investiture Debate: VAT Reduction, Public Transportation, and More

The acting President of the Government and candidate for re-election, Pedro Sánchez, has made a series of economic commitments during his speech in Congress this Wednesday, in the investiture debate. His proposals include reforms in housing, transportation, energy transition and taxes. These are the most notable proposals:

1. The VAT reduction is extended for six months, until June 2024, from 4% to 0% for essential foods such as bread, milk, eggs or fruits and vegetables, and from 10% to 5% for other products such as oil and pasta.
2. Public transportation will be free starting January 1 for young people, seniors and unemployed people.
3. The average income threshold is raised from 30,000 to 38,000 euros so that families can benefit from the mortgage relief measure, which among other things freezes the monthly payment for one year and extends the repayment period to seven years.
4. 183,000 public homes will be enabled for affordable rental, in line with the commitment made during the last legislature, and more tax incentives will be granted for people who decide to rent their apartments. In addition, the Young Rental Bonus will be increased, which currently implies an aid of 250 euros for those under 35 years of age.
5. It will expand the progressivity of personal income tax, giving more equal treatment to capital and labor income, in line with what the coalition Government has been developing in the previous legislature.
6. They will reach an effective rate of 15% in corporate tax, making large companies tax on the accounting result, that is, profits.
7. Part of the public debt of all the autonomous communities will be assumed, as announced last week.
8. In labor matters, maternity and paternity leave will be increased to 20 weeks from the current 16 and work will be done to achieve full employment.
9. The interprofessional minimum wage (SMI) will continue to grow throughout the legislature to ensure the purchasing power of workers, established in the Workers’ Statute that it will increase at a pace of 60% of the average wage.
10. It will reduce the weekly working day gradually, going from 40 to 38.5 hours in 2024 and to 37.5 hours in 2025.
11. In terms of energy policy, the National Energy Commission (CNE), which is currently integrated into the National Markets and Competition Commission (CNMC), will be recovered.
12. It commits to renewable energy producing all electricity by the end of the decade.
13. In health policy, procedures will be simplified and a maximum of 30 days will be set for receiving benefits such as dependency assistance.
14. The requirements for access to the minimum vital income (IMV) will be simplified so that “more households can collect it.”

Many of these legislative commitments were previously acquired as part of the Government pact between PSOE and Sumar, presented in October. The document presented at that time by Sánchez and the second in office, Yolanda Díaz, contemplated 230 measures with a heavy labor, social and fiscal burden on companies that quickly aroused the strong rejection of the employers and the support of the unions.

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