Spanish government new economic crisis policies

In Spain’s annual State of the Nation debate Zapatero announces 11 economic initiatives to combat the crisis

In yesterday’s debate in the Spanish parliament over the state of the nation the president, José Luis Rodríguez Zapatero outlined 11 initiatives aimed at revitalizing the economy placing special emphasis on initiatives to help the car industry, the housing sector and small to medium sized businesses.

Firstly Zapatero outlined the government’s plan to change the current tax allowance for the purchase of a property to live in. The current system which gives a tax allowance of 9,015 euros for the purchase of a house will continue for all those who have purchased or purchase their properties before 2011. However after this date only those with incomes inferior to 17,000 euros will benefit from this tax allowance. Furthermore this tax allowance will disappear for those households with incomes above 24,000 euros.

Therefore with only 17 months left before the new regulations come into effect the government hopes to revitalize the housing sector which currently has a surplus of 800,000 houses and flats.

After 2011 only those on low incomes will be entitled to tax allowances for the purchase of a property.

Zapatero also announced more help and tax allowances for those who rent and said that the government would invest more money in subsidized housing. He said that there would be a 60% tax deduction for those renting which would rise to 100% for those under the age of 30.

Plans to help small to medium sized businesses aimed at fighting rising unemployment were announced yesterday. Zapatero said that 5 points would be taken off taxes charged to all small and medium sized businesses with fewer than 25 employees and with a turnover of under 5 million euros that maintained or increased their workforce until December 2009.

This initiative is also aimed at helping the self employed.

The car industry which accounts for 11% of Spain’s GDP and generates 2.6 million jobs for the economy will benefit from a further investment of 600 million euros which will be added to the current Plan Renove. There will also be direct help for those who want to purchase a car with a subsidy of 2000 euros, 500 of which will be provided by the government, 500 by the regional government and the other 1000 euros by the manufacturers. This measure will come into effect from 1st June this year and will apply to all vehicles costing less than 30,000 euros.

Zapatero announced measures to help local investment with funds totalling 5,000 million euros for work related to improving the environment, technology and work related to helping people with physical disabilities.

There will also be a fund of 20,000 million euros for economic sustainability.

Plans to renew Spain’s public transport system were announced. Buses more than 10 years old will be replaced by new ones. The government will therefore support the purchase of up to 2000 new buses. Companies will also be encouraged to provide their workers with bus passes which will result in a reduction of 24% in the cost of transport.

Zapatero announced plans to help improve technology in schools with the purchase of 420,000 laptop computers for classrooms, wi-fi internet connection in schools, the installation of digital blackboards and training for teachers in the best use of technology for educational purposes.

Another initiative related to education is the announcement that university graduates aged between 25 and 40 years old receiving benefits will be entitled to study for a Masters degree free of charge. It is believed that this initiative will cost the government around 70 million euros.

Zapatero announced cuts in the general state budget of 1000 million euros which will be added to the cuts of 1,500 million euros announced in February this year saying that special effort was needed to combat the current economic crisis.

Finally Zapatero announced plans to help restructure the banking sector. This initiative is aimed principally at banks reinforcing their own resources. The president said that the government was currently in the process of designing a new scheme and added that this was being carried out in collaboration with the PP and the Bank of Spain.