The extraordinary Council of Ministers, the first held by videoconference, has approved a first package of measures to combat the damage that the coronavirus epidemic is causing in health and in the economy. The Prime Minister, Pedro Sanchez, has broken down the measures divided into four blocks. To protect medical activity, social care and direct aid to families, protection of the employment of SMEs and the self-employed and, finally, to protect productive sectors most affected by the crisis such as transport and tourism. The package represents an injection of 14,000 million in the economy and the transfer of another 3,800 million to strengthen health.
Among the measures approved, a six-month moratorium for the payment of taxes to SMEs and the self-employed stands out. “This is an important measure that will allow 14,000 million to be injected into the productive system,” Sanchez said. For the tourism sector, an ICO line has been provided with more than 400 million for tourism, transport and hotel companies. To preserve employment, the Social Security bonuses in discontinuous fixed contracts are expanded to cover the contracts from February to June 2020. In addition, an advance of 2,800 million is approved on account of the financing system that will be transferred to the autonomies to strengthen their health services. The Government will also mobilize 1,000 million for priority health interventions. In addition, 25 million have been released to alleviate child poverty as a result of the suspension of the activity of school canteens. Finally, for temporary sick leave, Social Security will pay 75% of wages.
The detail of the economic measures approved by the Council of Ministers this Thursday highlights the six-month moratorium for the payment of taxes to SMEs and the self-employed. “This is an important measure that will allow injecting 14,000 million into our production system,” said the president. “There are a lot of small and medium-sized companies, self-employed who are viable and sustainable, but who are affected by the health emergency.”
Government sources explain that since the royal decree approved this Thursday with urgent measures to respond to the economic impact of Covid-19 until next May 30, 2020, the Treasury will allow companies and the self-employed to postpone up to 30,000 euros on payment of taxes for six months, with three months grace period. The potential impact of this measure will reach 14,000 million euros. These deferrals will be granted for a period of six months, but the companies will have the option to return the money to the three and not pay anything in interest.
The Ministry of Finance explains that SMEs and the self-employed may request the postponement for concepts that until now have been considered as deferrable. Thus, it will be allowed to postpone the payment of personal income tax withholdings, passed VAT payments and fractional payments of corporation tax. The Treasury recalls that the General Tax Law does not allow the term of these concepts to be postponed, but the Government approves a legal change that allows it to provide more liquidity to small companies and the self-employed.
The planned measures on the labor market and the benefit for working parents who have to stay at home to take care of their children because their companies have not been able to offer them an alternative to telework, they have finally been left for the next Councils of Ministers, despite the fact that the initial plan was for it to go ahead this Thursday, as announced by the Minister of Social Security, Jose Luis Escriva. “In the next few days we will continue to approve economic stimulus packages to cushion the very harmful impact that the crisis is having in our country,” Sanchez replied when asked about the absence of these measures.
The postponement of debts and taxes for SMEs is the first major measure approved by the Government to cushion the impact of the coronavirus crisis. But there are others. For the tourism sector, an ICO line has been provided with more than 400 million for tourism, transport and hotel companies, and to preserve employment, Social Security bonuses are extended in discontinuous fixed contracts to cover contracts from February to June of 2020.
It has also promised to make use rights more flexible (slots) for companies to decide whether or not to use them “without fear of losing them”. This measure, he recalled, requires the approval of the European Commission, which has already shown its willingness to accept it.
In his speech, the president also recalled that Renfe will facilitate cancellations and cancellations of tickets, and also the refund of money from Inserso trips, which were canceled last Tuesday. Sanchez also recalled that Health has presented a guide of good practices that includes specific prevention measures and that Public Administrations will pay 100% of the remuneration of public employees who are sick or in forced quarantine.
The president also took the opportunity to ask for the support of the other political forces to carry out this year’s public accounts. “If a few months ago budgets were necessary, today they are pressing,” he said.