Spanish government preparing broad economic overhaul

MADRID - A package of regulatory reforms, tax changes and measures to spur job creation will reinvigorate the Spanish economy in 2010, Economy and Finance Minister Elena Salgado has said.

Though the cabinet has agreed on the outline of the Sustainable Economy bill, the Socialist administration will consult with opposition parties, business, labour and authorities in Spain’s autonomous regions before sending the measure to parliament, she said Friday.

Prime Minister Jose Luis Rodriguez Zapatero expects the plan to take effect by mid-2010, Salgado said, adding that the package will be accompanied by a Sustainable Economy Fund of 20 billion euros ($30 billion).

The minister said one of the principal aims of the initiative is creating a “stable and predictable” regulatory framework that is not unduly burdensome.

In a move to address the controversial question of executive pay, the package would require publicly traded companies to submit compensation to a shareholder vote.

That change would also help Spain’s central bank push firms to adopt “coherent” compensation policies and a “prudent and effective” approach to risk management, Salgado said.

The government likewise hopes to impose discipline on public spending by requiring municipalities to produce quarterly budget and expenditure reports and by tasking the General State Administration with developing an austerity plan.

To boost Spanish competitiveness, Zapatero wants to shorten the time it takes to create and register a new business, his economy chief said.

She said the package will include an increase in existing tax deductions for research and development and for green investment.

Also on the fiscal front, Salgado said the government wants to limit the deduction for home purchases to people with an annual income of less than 24,107 euros ($36,000) and to equalise the tax treatment of buyers and renters.

–EFE