Government Reform Programme
Second Half of 2012
Council of Ministers of 13 July 2012
Overall Objectives,
Specific Measures

Objectives: To tackle the difficult economic situation in Spain. To
continue and intensify the process of deficit correction and structural
reforms, tackling the imbalances that exist in Spain following the EU
Recommendations.
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Reform of Public Administrations
Strengthening Fiscal Consolidation
Structural reforms aimed at competitiveness
PROGRAMME OF REFORMS
SECOND HALF OF 2012
I. Public Administration Reform
Fostering efficiency in Public Administration
and contributing to budgetary adjustment.
Reform of the
Public Administration Services

Objectives:
 Promote austerity and efficiency
 Guarantee sustainability and quality of public services
 Avoid duplication and overlaps:
“One administration, one power”


Ensure the engagement of all Public Administrations in the achievement
of the deficit targets
Measures:

The Local Government Streamlining and Sustainability Act.

Measures to guarantee financial stability of regional governments.

Reforms in the field of public employees and officials.
Local Government Reform

Objectives: To strengthen local autonomy, guarantee adequate provision of
services, and ensure financing and budgetary stability.

Measures: Local Government Streamlining and Sustainability Act.

Definition and limitation of powers, eliminating improper powers.

Underpin role of Provincial Councils in provision of common services

Guarantee budgetary stability of local authorities, improve transparency and
efficiency in their management and independence of public auditors.

Reduction in number of state-owned companies at a local level

Limits on salaries received by mayors and a 30% reduction in the number of
local councillors to a maximum of 35 in the largest municipalities.
Measures to Guarantee the Financial
Stability of Regional Governments

Objective: Ensure liquidity and solvency of Regional Governments and strict
compliance with the Budgetary Stability Act.

Measures:

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Creation of a regional government liquidity mechanism: max. € 18
billion

Voluntary regional government participation.

Funding of authorised deficit, debt maturities and loans that cannot be
refinanced.

Debt issued by Treasury but allocated to regional governments.
Strict conditions to access the mechanism: Compliance with deficit
targets, adjustment plans, monthly report on budgetary performance,
greater control by the Comptroller General’s Office, prior approval for the
issue of debt…
Reform regarding public employees and
officials.

Objective: To adapt civil service employees’ and public officials’ regime to
economic reality, contributing to budgetary stability and competitiveness.

Measures:

Efficient and optimum allocation of human resources.

Adjustment in the number of full-time trade union representatives.

Reduction in the number of personal days off.

Equal temporary incapacity conditions to those of the rest of workers.

High officials: Incompatibility of Ministers’ and State Secretaries’
severance pay with other jobs.

Exceptional Measure: Elimination of the December extra salary, or
equivalent reduction, for civil servants, high officials and MPs. Only civil
servants will recover this amount after 2015 through contributions to their
pension funds.
II. Fiscal Consolidation
Deficit control as the basis for economic growth
and a fundament of Spain’s commitment to Europe
Less Deficit: more confidence in Spain,
more commitment to Europe


Objective: Free Spain from the deficit and public debt burden, guarantee
fiscal consolidation and comply with obligations arising from the Excessive
Deficit Procedure
2011
2012
2013
2014
8.9%
6.3%
4.5%
2.8%
Measures:


Adjustment and streamlining of public spending
Reform of the tax structure
Impact 2012-2014:
€ 65 billion
Spending Cuts by the Ministries

Objective: Reduce public spending in the budgetary headings of the
ministerial departments in areas not associated with growth.

Measures:

Budget cuts in the field of subsidies, current goods and services, and
transfers in the General State Budget 2012.


Saving: € 600 million
A further 20% cut in subsidies paid to political parties, trade unions and
business organisations in the General State Budget 2013
Streamlining of Active and Passive
Employment Policies

Objective: Guarantee the sustainability of the unemployment benefit
system and correct shortcomings in the system.

Measures:

Withdrawal of the least efficient recruitment tax credits: those linked to
entrepreneurs and the insertion into the labour market of groups with
particular difficulties are maintained.

Unemployment benefit adjustment:
 The amount received from the 7th month onwards is reduced from 60%
to 50% of the calculation base.
Neither current recipients nor minimum limits are affected.
 Standardisation of the Social Security contribution regime regarding
salaries and unemployment benefits.
Establishment of requirements to receive the Active Reinsertion Benefit,
such as having worked in the past.

Sustainability Guarantee for the
Long-Term Care System

Objective: Consolidate and guarantee the future of the long-term care
system by resolving its finance and management problems and ensuring the
treatment of long-term care recipients under quality and fair conditions

Measures:

Simplification of the scale and adaptation of the services and benefits to
the long-term care needs.

Revision of the economic benefit for care within the family environment:
adjustment of maximum amounts, revision of contribution to the Social
Security system and establishment of criteria for the caretaker.

Adaptation of the contribution to the cost of the service depending on the
user’s economic capacity, with common criteria throughout Spain.

Suspension of the level agreed with the regional governments and
changes in the implementation schedule in order to guarantee care for
those people with greater long-term care needs
Sustainability Guarantee for
the Social Security System

Objective: Guarantee the sustainability of the public pension system and
bringing the effective and the legal retirement age closer.

Measures:


Proposal on the sustainability of the public pension system to be
assessed under the “Pacto de Toledo” social dialogue:

Regulation of the Sustainability Factor to maintain proportionality
between contributions and benefits.

Tackle measures regarding partial and early retirement.
Efficiency improvements:

Assimilate for Social Security contribution purposes the treatment of
incomes from employment to the income tax treatment.

Standardise 20% penalty rates for late payments of Social Security
contributions.
Restructuring of the
Spanish Tax System

Objective: Adjust the structure of the Spanish tax system to the European
system, increasing stability, equality and efficiency.

Measures:

Larger proportion from indirect taxes

VAT: New rates (standard rate up from 18% to 21%, reduced rate up from 8% to
10% while the super-reduced rate is maintained at 4%) and reclassification of
products.

Increased Tobacco Tax

Lower proportion from employment taxes, reducing Social Security
contributions by 1% in 2013 and a further 1% in 2014

Adjustment of the Corporate Income Tax, particularly the quarterly
payment system.

Modernisation of the Personal Income Tax structure, eliminating the
primary residence deduction in 2013.
III. Structural Reforms
Measures aimed at enhancing competitiveness,
boosting growth and creating jobs
Retail Trade
Liberalisation and Increased Flexibility

Objective: Increased freedom and efficiency in retail trade distribution and
new instruments for effective competition.

Measures:
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Liberalisation of trading hours: the minimum number of trading hours
per week is increased from 72 to 90 and the minimum number of public
holidays from 8 to 10.
Liberalisation of promotional sales activities: introducing flexibility in
the current regime, eliminating restrictions and incompatibilities.
Coastal Area Protection Act
Legal Certainty

Objective: Guarantee legal certainty, the protection of coastal areas and
the sustainable use of the coastline, and solve the problems generated by
previous legislation

Measures:
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Reaction mechanisms, suspending the concession of licences to projects
that breach the Coastal Area Protection Act.
Creation of a legal security framework for the economic activities
carried out in coastal areas.
Strengthened control by the State of coastal areas, with measures
aimed at guaranteeing the end of urban development abuses in coastal
areas
Strengthened environmental conservation in coastal areas, only
permitting projects that increase the energy efficiency of already existing
buildings and without relaxing construction limits.
Legislative Programme of Reforms
Second Half of 2012 (I)

Objective: Progress on structural reforms aimed at transforming the Spanish
institutional and economic architecture, as a necessary condition for restoring
confidence and returning to growth

Laws that will be submitted to Parliament:
 Reform of the Public Administration:
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Fight against Fraud:
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Streamlining and Sustainability of Local Administration
Transparency, Access to Public Information and Good Governance
Foreign Service Act.
Tax Fraud
Social Security Fraud
Reform of Criminal Code
Employment and Social Security Reforms:

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Mutual Insurance Companies Act.
Regulation of the Sustainability Factor
Legislative Programme of Reforms
Second Half of 2012 (II)
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Market Unity and Legal Certainty:
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Liberalisation, flexibility and competency measures:
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Constitutional Law on the General Council of the Judiciary
Market Unity Act
Reform of Supervisory Bodies: Creation of the National Markets and
Competition Commission
Act on the protection and sustainable use of coastal areas and amendments to
the Coastal Act.
Act on measures to improve the way the food chain operates
Trading hours and Promotional Sales Activity
Professional Services
Land Transport Sector
Railway and Airport Transport Services
Property Rentals
Energy Reform: Solution for the Tariff Deficit
Reform for the Quality of Education and Professional Training