President Sanchez Opposed VAT Reduction To 10% That Could Save 10,000 Hairdressers.
Spain’s President, Pedro Sanchez, opposed the reduction in VAT to 10% for hairdressers that has now been given the green light to proceed to a Decree-Law. However, it has not been an easy process as the Socialist Party had fought to maintain VAT at 21% despite putting at risk the livelihoods of 20,200 hairdressing and beauty salons, and more than 47,000 jobs throughout Spain.
In the last vote in Spain’s Senate, the PSOE was forced to abstain after seeing how all the political parties gave the green light to the tax cut that will save more than 10,000 hairdressers from closing- it is was Pedro Sánchez’s party that wanted to maintain the VAT level at all costs.
However, if the calculation of the different VAT collection scenarios- 21% and 10%- is added to the collection of contributions to Social Security from workers, the decrease in VAT from suppliers and manufacturers and the social benefits that would cause an increase in the figures of unemployment, the net collection balance for the General State Administration offers revealing results.
If, for instance, the 21% VAT level is maintained, the money collected would be only €14.3 million, compared to €160 million, which would be achieved with 10% VAT; Therefore, the 10% VAT reduction would offer a positive balance of €145 million euros for the State coffers.
The Business Alliance for Hairdressing and Aesthetics have celebrated ending the historical injustice of having to pay VAT of 21% on an essential service such as personal beauty, and they hope that this demand can be reflected in a Decree-Law that makes it effective.
The beauty industry in Spain suffered losses of 35.7% over Christmas, normally it’s busiest period, which translates to a total economic loss of 140 million euros- add to this the lack of weddings and ceremonies caused by the pandemic and it is easy to see why the VAT reduction is so important for the sector.