The Balearic government's budget plan for the next three years contemplates a deficit in both 2026 and 2027. Forwarded for analysis by Spain's finance minister, María Jesús Montero, the key reasons for this deficit are tax cuts and increased public spending, especially on personnel.
No deficit is projected for 2025, but in the following two years changes to inheritance and wealth taxes are programmed to have an impact.
All citizens benefit because of the elimination of inheritance tax, but this clearly isn't the case with wealth tax. The tax savings are that much greater for those individuals with large fortunes; the beneficiaries are those who have assets worth up to three million euros.
Llorenç Pou of opposition party PSOE stresses that the government must comply with the rules of budgetary stability, so it will have to find a formula to overcome an anticipated imbalance of 230 million euros. He is meanwhile critical of the fact that the government has approved tax cuts for the rich but not for others.
In principle, a regional government cannot have a deficit, this having been a stipulation of the budgetary stability legislation introduced by the Mariano Rajoy Partido Popular government in 2012. The Balearic government will be hopeful that the programmed deficits will be overcome through increased revenue from the annual rounds of regional financing by the Spanish government.