Economic Recommendations to Spain by European Commission

In October 2014, the European Commission (EC) proposed a series of measures for Spain, says its report Country-Specific Recommendations 2014.
Economic Recommendations to Spain by European Commission
Spanish Prime Minister Mariano Rajoy speaks during a conference hosted by the Financial Times newspaper titled 'Restoring Competitiveness' at the Ritz hotel on Oct. 14, 2014, in Madrid, Spain. Denis Doyle/Getty Images
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MADRID—In October 2014, the European Commission (EC) proposed a series of measures for Spain, says its report Country-Specific Recommendations 2014.

Among these suggestions, EC stresses that the ways to lower the high debt of Spanish Public Administration must be emphasized, “on a path of steady decline.”

Spain is included among the 17 European countries whose economy is subject to a deeper monitoring, like Germany, Austria, France, and Italy.

“The Commission examined Member States for possible macroeconomic imbalances, and conducted a thorough review for seventeen of them,” reported the EC.

Spain’s report recommended the country “to ensure that a new independent fiscal authority can begin to function thoroughly as soon as possible, and to rigorously and transparently implement, at all levels of government, the preventive, corrective, and coercive measures provided by the Organic Law of Budget Stability, including those related to the elimination of debts owed to commercial entities.”

The report also noted, that Spain “should make a systematic review for spending at all levels of government before February 2015, in order to help improve the efficiency and quality of public spending.”

It suggested to further improve the efficiency of the health system, especially to increase the “rationalization of pharmaceutical spending.” For this plan, it proposed to intensify the “coordination between the different types of care, while preserving accessibility for vulnerable groups.”

This document also explains how convenient it is to adopt, “by the end of 2014, a comprehensive tax reform, that simplifies the tax system, and make a greater contribution to growth and job creation, as well as the preservation of the environment, and stability of tax collection.”

According to EC, Spain should “move taxation towards less distorting taxes such as those on consumption or environmental degradation (eg. taxes on fuels), or recurrent taxes on real estate.”

It also suggests “to eliminate deductions on corporate tax and income tax.”

In the case of low-wage jobs, the EC proposes to consider the possibility of reducing corporate social security contributions.

At the same time, EC stresses the need “to keep correcting the bias in favor of debt on corporate tax”, as well as taking action “to prevent ’taxation' from hampering the smooth functioning of the internal Spanish market”, and “intensifying the fight against tax evasion.”

Read the original Spanish article here.