The Spanish left-wing government is preparing the counter-attack. Three days after the right decided to reduce certain taxes in the autonomous regions it governs, the executive, led by the socialist Pedro Sanchez, is working on a new tax targeting the richest taxpayers. Nothing has yet filtered on the rate or level of wealth concerned, except that “it will affect less than the richest 1%”said the Minister of Finance, Maria Jesus Montero.
This new wealth tax, which should come into force in 2023, will be temporary, as long as the war in Ukraine and its consequences continue to undermine the European economy. In August, inflation again exceeded 10% in Spain. “As for the taxes on the excess profits of the electric companies or the banks that we voted”it is about asking “greater effort” to large fortunes to finance family support measures, added Mme Montero. While acknowledging that “the debate has accelerated because certain autonomous regions are using the tax on assets to carry out a kind of fiscal dumping”.
On September 19, the president of the Andalusian regional government, the conservative Juan Manuel Moreno Bonilla, created a surprise by announcing the abolition in Andalusia of the heritage tax – a tax which falls within the competence of the regional governments and which taxes, in principle, real estate or financial assets with a value of more than 700,000 euros. “This will have almost no impact on the accounts of the Andalusian government, since the tax on heritage represents only 0.6% of regional levies. On the other hand, it will attract investment and encourage people to establish their tax residence in Andalusia”he announced, taking the opposite view of the policy pursued by the left-wing government.
Predicting that this increase in the number of taxpayers [sera] much more beneficial than the loss of wealth tax”, the Andalusian president (Popular Party, PP, right) justified the measure by assuring that half of the twenty largest Andalusian taxpayers have left the region, “causing a loss of 3.5 million euros in wealth tax and 14 million in income tax”.
A “symbolic charge”
“Wealth tax is a controversial tax that only raises 1 billion euros per year in Spain, but it has a strong symbolic and ideological chargeunderlines the economist Angel de la Fuente, director of the Foundation for Applied Economic Studies. Presenting its removal as an attack on solidarity, as the government does, is questionable. But it is very unlikely that Andalusia will manage to compensate for the loss of this tax by a hypothetical increase in the number of taxpayers, as it claims. »
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