The Government has approved this Tuesday a new package of measures to alleviate the effects of the inflation. This is the seventh plan of these characteristics, which, like all the previous ones, aims to make the rise in the cost of living more bearable for the population, mainly caused by the war in Ukraine. The latest decree-law extends several measures already in force, some of which were already planned, but it also incorporates some novelties that are worth dwelling on, because they allow us to glimpse the socioeconomic moment that the country is going through.
Indeed, since the first anti-crisis measures were implemented until today, prices have moderated their escalation and, although inflation continues at high levels (3.2% in May) which may justify the new batch of aid, it makes sense to gradually adapt them to the new situation. Other macroeconomic data, such as the evolution of GDP or employment, also indicate a gradual return to normality that leads to rethinking the exceptional measures.
The elimination of the mandatory six-month extension of rental contracts (in force since the pandemic) falls within this logic. The socialist part of the Government decided to abolish this measure, with the opposition of Sumar, who was in charge of making public the umpteenth disagreement with his coalition partners, less than a month before the general elections. As the economic vice president, Nadia Calviño, recalled, the most vulnerable tenants are not left unprotected, because the recently approved housing law already includes a similar measure. The difference is that it is no longer generalized, but focused on those who need it most. On the contrary, the VAT reduction on basic foods is maintained, which in addition to being of doubtful effectiveness, in fiscal terms It is not progressive (it benefits high and low incomes equally). The Government seems to have opted for the VAT issue so as not to dissatisfy an electorate that could make them pay at the polls.
In terms of mobility, the discount for public transport and fuel for carriers is maintained and a deduction is added to personal income tax for the purchase of electric cars. Although among the most notable additions to the current set of measures are those provided for in the family law for the care of relatives, who ran the risk of ending up in a drawer due to the electoral advance and that the Government has rightly included in the decree. The three recently approved work permits represent a progress in reconciliation, although more theoretical than practicalsince not all of them are paid, there will be workers who will give up requesting them.
The shock plan will mobilize an additional 3,800 million euros and the total impact, including tax cuts and bonuses, will amount to €8.9 billion the second half of the year. A fiscal cost that the Government understands to be necessary, but which also has to be assumed by the State. For this reason, as inflation stabilizes, these exceptional aids may no longer be justified. He public deficit It maintains a good evolution – it fell to 4.8% of GDP last year, partly thanks to higher tax revenues due to inflation – and it would not be prudent to leave excessive mortgages that compromise this trend.