The Economic and Social Council considers that the 2.9% increase in tax revenue provided for in the state budget threatens the economic growth, investment and employment, its implications on consumption and business competitiveness.
“Despite the replacement income, with relief from the IRS, namely the reduction of the surcharge and the different distribution of tax revenue, the increase in tax revenue provided for in OE 2.9% introduces a significant risk in growth capacity of the economy, investment and employment, its implications for the reduction in consumption and business competitiveness, “says the draft opinion on the State Budget (OE) for 2016 that will be discussed and approved this Wed Thursday in plenary of the Economic and Social Council (CES).
the Committee also considers that lower economic growth may also come to be reflected in tax revenue, as in the recent past, making it difficult to achieve the envisaged budgetary targets.
While recognizing that the “budget is intended to be an alternative instrument of development, with priority to economic growth” based on the “increase in household disposable income,” the ESC this goal falls short of the originally proposed because of the “constraints of the budgetary procedure, within the framework of Economic and Monetary Union and the negotiations with the European Commission.”
“the demand for greater budgetary consolidation, imposed in negotiations with the European Commission in accordance with the budget Treaty, led to the OE 2016 proposal has passed an expansionist nature to a budget more restrictive bias, “says the Council.
the ESC stresses the guidance given to fiscal policy on resource allocation to the State’s social functions, but considers “somewhat understandable weak growth (0.2%) of the value of benefits, taking into account the aim of reinforcing the social policies set out in GOP and in the Proposed State Budget 2016 “.
in the draft opinion, the Committee expresses the hope that the State Reform and Administrative Modernization” not be only the statement of the measures, but that they can be implemented to transform the state into an entity that can ensure the conduct of the development strategy and the public interest. “
” in addition, the improved organization of public administration, which also includes greater qualification of human resources, will allow greater efficiency of services and proximity to citizens with obvious implications in reducing costs and improving service, “considers the CES, saluting the Simplex programs and Zoom.
to the Council, the evolution of public debt is a major constraint to development, in that it limits access to state funding and decision-making autonomy in the budget.
“the evolution of public debt is considered a major constraint to the development of the country in the medium and long term. In addition to the limitation that introduces access to finance, both for the Republic both for banks and companies is the same responsible for much of limitations on the decision-making autonomy in fiscal policy, “he says.
in the document, the Committee recognizes that “the relative weight of public debt has decreased” since 2015 but is expected to rise in 2016, “downloading, however, as a percentage of GDP to 127.7%, above the SGP, but below the forecasts of the European Commission of 128.5%. “
As for interest expense, this should rise to EUR 8.5 billion in 2016, and” while diminishing as a percentage of GDP, this value is much higher than the overall budget deficit, requiring a greater restrictive policy bias, translated the passage of the primary balance of 0.4% to 2.3% of GDP, “says the Committee.
in the document, which brings together the contributions of the social partners, the ESC also draws attention to “the risk inherent to the rise in interest rates in the face of market volatility, as processes in the monitoring of budget implementation by the European Commission, the European Central Bank (ECB) and International Monetary Fund (IMF “).
the Committee takes note of the issuance of debt by the Treasury, replacing loans (such as the IMF) by others with interest rate more favorable, “thereby contributing to the reduction of interest rate on the debt,” although it still remains high, at 3.7%.
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