Talking about fiscal policy, Juan Bravo (Palma de Mallorca, 1974) is able to cite a detail about the Estonian civil registry. He thinks almost as fast as he speaks and he is the conjurer behind the tax reform that, according to the Andalusian government, is worth a legislature. He entered as a substitute, but he is one of the most brilliant figures of the Executive of PP and Cs. “I could never do it without my team,” he clarifies in a gesture typical of a former professional futsal player who, however, looks forward to continuing in a second term if Juanma Moreno wins the elections and has him.
–Two years in a row with a surplus. Is it a record?
– I think not, but I would speak of budgetary balance. A surplus of 200 million in a budget of more than 40,000 is a smaller amount, it does not reach 0.5%. We have had artificially increased installments on account. That is going to mean that in 2022 and 2023 we will have to make refunds. If we go to deficit, when we have to pay back the excess of this year, we will return to deficit. This double deficit is irresponsible. The more debt you have, the more difficult it is later to balance the accounts. When you go to the markets, a government that complies is not the same. They lend us money at a lower cost. We put 1,000 million in sustainable bonds on the market and there was a demand of 2,600 million. Less cost of debt is more healthcare and more education.
– What part of the balance is due to your effort and conviction and what part to the money that has come from the Government due to the pandemic?
–The government’s money helps, although it has reached us in a percentage that we understand is lower than what we would have been entitled to. Our Covid spending has been greater than the amount we have received, which has been an effort by all the ministries. They have understood that the priorities were health, education and social policies. And we have made an effort with the financial aid packages.
– How much money has come from the Government in 2020 for the Covid?
–About 2,300 million euros between the Covid fund and other items.
– The Government speaks of 4,000 million because they include payments on account, which have been maintained despite the fall in income caused by the pandemic.
“We are going to have to pay that money back.” We are not going to include it. We owe it. In addition, that money is not from the Government or Andalusia, the Andalusians pay it with taxes. It is an advance that we will have to return. If they forgive us, we will have to recognize that the money comes from the Government.
“The payments on account for 2020 are not an extra income for the Covid. We have to return it to the Government”
– Will the spending on health and education invested in an extraordinary way by the Covid make it structural?
-I hope not. It will be synonymous with the fact that we have overcome the pandemic. There has been an extraordinary expense in hiring that, if there were no pandemic, it would not be necessary.
–But this increase in toilets and teachers has served to cover deficiencies that were already there before?
–Until 2021 we have increased investment in healthcare by 2,000 million euros; in education, 1,000, and in social policies, 400 million. For now, there will be things that have to be maintained, but others we hope will return to normal after the pandemic. The logical thing is that in successive years the amounts that we have to invest are significantly lowered. Not so much the hiring, but others, and we hope that we can dedicate these resources to economic activity.
– They complain that the Government harms Andalusia because there is an Executive of the PP and Cs. What do your party colleagues tell you when they are the beneficiaries, as has sometimes happened with the Community of Madrid? For more money to get here, you have to take it away from them.
-Well, or put more. It depends on the needs that you consider that each one has. I share many things with Valencia [donde gobierna el PSOE he apoyado algunos de sus planteamientos porque eran buenos para Valencia, Murcia y Andalucía. Al repartir el fondo React EU nos han vuelto a perjudicar. Nos han dado el 18,81%, pero si hubieran utilizado el criterio de Europa, nos hubiera correspondido el 30%. Alguien puede decir que es una barbaridad, pero tan barbaridad como que a Alemania le llegarán 20.000 millones [del Next Generation] and to Spain 140,000. We see it well for Spain. Why don’t we see it well for the national territory?
– Do you think you will see the reform of the regional financing system as a counselor?
-Not. I am that blunt because the reform began in 2017. After the motion of no confidence, the Minister of Finance became the one who said it was the most important thing and after a month she said that it was not a priority at that time. No movement has been made in three years and the only reform she talks about is the tax reform, to raise taxes.
– Have you already signed the agreement with the Treasury for the aid to reach government companies?
–We transferred to the Ministry some observations regarding possible problems in the decree. Since they have no will to appreciate it, we have no choice but to sign it knowing that it may cause problems. We cannot leave the Andalusians without receiving these aid, despite the fact that they will come with problems of different kinds. This will create problems and we have told the Ministry.
– Do you also foresee problems with the arrival of the Next Generation money?
-It’s already happening. We are in May and we are not using them.
-Nor anyone in Europe. There are countries that have not yet ratified its use.
–But nobody is like us. And there are countries that have sent their plan to Brussels before, such as Portugal, with a left-wing government. And they lower taxes. We are the country that has had the most deaths, more infections, more debt, more deficit, more unemployment and more drop in GDP. Six values, all negative.
“But, I insist, no one is using their funds yet.”
– Indirectly yes. By the time taxes go down they are already pumping up the economy. Here we have raised taxes. It seems that everything is fixed with subsidies and aid and this we dragged in Andalusia. It is also arranged with tax cuts, with streamlining of administrative and bureaucratic procedures.
– That is why they have implemented a tax reduction.
–What is done in Europe and what the European authorities recommend. We are the only country in Europe that has lowered taxes.
– There are also those who advocate the opposite. The IMF and the new US government are now positioning themselves to raise taxes on fortunes and large companies.
-In the US there has been a change. I do not go into whether Biden or Trump is better, but Trump’s policy, which lowered taxes, activated the economy and lowered unemployment to 4%. In Spain there are six million people who cannot work. When taxes are lowered, jobs are created and employment is the best social policy. The IMF has raised a tax to those that the crisis has not harmed, not the rich, on a temporary basis and linked to specific spending. Finland has done something similar, but has a maximum rate of 33% and has raised it to 39%. In Spain we are at 45%. It is said that the tax burden is lower, but the tax burden is what we collect from GDP. And in Spain there are many people who cannot work and, consequently, cannot consume and cannot contribute taxes. If there were only a million unemployed, the tax burden would be higher, we would be at the level of Europe without any problem. The US has said that it is going to raise taxes and there are already companies that are going to stop their projects there. First sign of the market. Families generate wealth for their children, not to pay for political systems or bad management. We have to work to make the Administration more efficient. Since 1977 the Spanish Administration has multiplied by four, but I do not hear about that, but about raising taxes . They say the rich, but they go up to sugary drinks, insurance and plastics. A soda or a lettuce wrapper is not paid for by the rich, we all pay for it.
– The opposition blames the tax reform for a lack of progressiveness.
–People who earn less than 14,000 pay nothing and can pay up to 45%. The progressivity is quite clear. Different is that some want it to be confiscatory. Paying 450,000 euros in taxes after earning a million with many efforts seems to me to be a sufficient contribution to the country.
– But whoever charges 20,000 euros may have more difficulties to pay what is due.
“But 450,000 is a lot.” There is no greater progressivity. In VAT there is no such progressivity.
We must stop demonizing people who, luckily, life has gone well and has economic capacity “
-Neither is there in your reform of the Inheritance Tax.
– It seems to us the most correct thing. We must stop demonizing people who, luckily, life has gone well and have significant economic capacity. By impoverishing the rich we do not enrich the poor. 0.1% of Spaniards earn more than 600,000 euros. To think that we are going to fix the 99.9% problem with 0.1% is demagoguery.
– Without the money that the Government has arrived, can a reform like this be faced?
-Of course, without the expense of the pandemic of course. In 2019 we stopped collecting 190 million in Successions, adding the reduction of the previous Government, which did very well, but we increased taxpayers by 119,000 and personal income tax collection grew by 600 million.
–The financing system is liquidated two years later, so the data you cite will not be known until the end of 2021. How do you know that the reduction in Successions caused this increase?
–The Tax Agency gave us the data in June, when the 2019 Income was presented. We know that this effect has occurred.
– They said then that this growth is due to the arrival of taxpayers with high incomes.
– Many have returned to Andalusia.
–Then there were economists who questioned that statement, who explained this increase by the growth in the number of workers in a context of economic growth.
-There’s everything. What is certain is that Andalusia has increased its taxpayers by 119,000 and has collected 600 million more for personal income tax. We are copying what was done in Spain between 1996 and 2004 and five million jobs were created. And between 2012 and 2018, applying the same theories, 3.5 million jobs were created. That is what we have to do. And just lowering taxes is not worth it, you also have to make the Administration agile and believe in the employer and the self-employed.
– And won’t it also have to do with the cycles of the economy?
– The good cycles are always when the PP governs with these policies? So that they vote for us because we carry positive cycles. It’s like thinking that Spain won a World Cup and two Euro Cups by luck. Luis Aragonés said that “it would be luck, but the more we train, the luckier we are.”
– A member of your Government explained to me that a country can compete in several ways to attract companies: with cheap labor, training its population and with tax cuts. Discarding the first and being aware that the second is complicated, do we only have the third?
“No, man, but if you lower taxes on your companies, you make them more competitive.” But that is not the only important thing. In Andalusia we make a very great effort. The cost of a child’s education, from three years to university, reaches 140,000 euros. What private company would train its people so that later they have to go abroad? That is what has happened here. Our model must be German, we have to believe it and work along that line. The strongest deduction from the tax reform is for investments in R & D & I companies linked to the university or technology centers, with up to 12,000 euros. We also have the deduction for language studies and computer science so that our young people can compete. That does not come from today to tomorrow, but the sooner you start, the sooner you reap the fruits.
– Has the negotiation with Vox and Ciudadanos been complicated?
-Not. This comes from a joint work of the three parties with us, who provide the technical part. With this reform, we comply with the commitments acquired in the PP-Cs Government agreement and subsequent agreements with Vox. There are tug of war, but knowing that we are three different games with a common goal, we must play mutual assignments.
– Will there be an electoral advance?
–The president and vice president tell me that they want to exhaust the legislature and we work with that time frame. It is important to exhaust the legislature, but it is true that there are other variables, such as the Madrid elections, and there may be other external elements.
–In this context, are you going to start preparing the 2022 Budget?
Yes, it is our obligation. It will help us to begin to see the effects of the tax cut, which should take effect next year.
