Sánchez's zero VAT and free transport plan lacks cost breakdown

Sánchez’s 14 economic measures: The bill remains uncalculated

Re-elected president with 179 votes, Pedro Sánchez unveiled a package of fourteen economic measures: an extension of zero VAT on basic foodstuffs, free public transport for young people, seniors, and the unemployed, increased mortgage relief thresholds, and a 15% effective corporate tax rate. What is absent from the announcement is the total cost. The only known figure is the new income cap for mortgage relief eligibility, which rises from €30,000 to €38,000.

Which foods have reduced VAT and until when?

VAT on essential food items—bread, milk, eggs, fruits, and vegetables—remains at 0%, with the reduction extended by six months until June 2024. Oil and pasta drop from 10% to 5%. This measure was first applied in January of this year, meaning the relief will have been in effect for at least eighteen months.

On paper, the impact on the shopping basket is direct. Another view argues it gets diluted within the overall cost: raising the minimum wage while paying more for groceries is a common observation, suggesting that cutting taxes does not address production costs or the root cause of inflation. If the issue is supply-side, removing VAT buys time but solves nothing.

Who pays for free public transport?

From January 1, public transport will be free for young people, older adults, and unemployed individuals. Neither the cost nor the actual scope of the measure is known, a gap left open by the announcement itself. The immediate precedent is the free travel on Cercanías and Media Distance trains approved in September 2022, a subsidy that continues until the end of the year.

This creates tension. Those who diligently paid their monthly passes see the benefit directed elsewhere, leading some to advocate for a universal flat fare—symbolic prices of €50 have been proposed—rather than full gratuity. The official defense states that tickets were already subsidized and this merely expands coverage to specific groups.

Mortgages, rent, and 183,000 public homes

The average income threshold for mortgage relief rises from €30,000 to €38,000, allowing more families to freeze monthly payments for one year and extend amortization up to seven years. Simultaneously, 183,000 public housing units will be made available for affordable rent, tax incentives are added for landlords, and the Young Rent Bonus, currently €250 for those under 35, is increased.

A detail buried in the text is the assumption of part of regional debt, applicable to all autonomous communities regardless of whether they use the Regional Liquidity Fund. For some analysts, this is precisely the point that could derail the entire legislative term.

The 15% corporate tax: Implementation details unclear

The commitment is a 15% effective corporate tax rate, with large companies taxed on accounting profit, i.e., declared earnings. Technical discussions quickly become complex: accounting profit differs from the taxable base, and alignment with double taxation exemptions and the 95% exemption on dividends from foreign branches remains uncertain.

A circulating example is simple. If a company declares €100 million in profit, it pays €15 million with no further nuances. Under this criterion, keeping headquarters in Spain becomes less attractive; the alternative route involves moving fiscal residency to countries with 100% deductions—Netherlands is often cited—and taxing here only domestic sales. This is what Ferrovial has already done. Predictable outcomes, according to this view, include legal uncertainty and corporate flight rather than increased revenue.

Minimum wage, working hours, and leave: Labor statute changes

The Minimum Interprofessional Wage (SMI) will continue to rise, anchored in the Workers' Statute at 60% of the average salary. Weekly working hours decrease from 40 to 38.5 in 2024 and to 37.5 in 2025, with incentives for flexible schedules and remote work. Maternity and paternity leave increases from 16 to 20 weeks. Additional measures include simplifying the Minimum Vital Income, capping dependency care benefits processing at 30 days, restoring the National Energy Commission, and aiming for renewables to generate all electricity by the decade's end.

Micro-enterprises, dominant in the productive fabric, feel this most acutely: each reduced hour represents payroll costs unless accompanied by subsidized hiring. A recurring counter-proposal suggests incentivizing job creators instead of distributing aid.

Where analysis hits a wall

Add it all up: tax cuts, free transport, more public housing, expanded leave, assumed regional debt. The question of funding is almost always answered with one word, debt, alongside warnings that future generations will pay. The complete calculation, line by line, remains off the table.