IFierce tax competition has broken out in Spain between the regional governments and the government in Madrid. In view of the inflation rate of 10.5 percent, the conservative PP has announced that it will relieve the burden on citizens with further tax cuts. The ruling left-wing coalition has reacted to this: It wants to burden the rich more heavily. After months of hesitation, the minority government has now decided to introduce an additional tax on high wealth and income, probably from 2023 onwards. As recently as June, the Socialist Prime Minister Pedro Sanchez rejected a tax on the wealthy that his alternative left junior partner Unidas Podemos has been demanding for a long time. But the PP's recent tax offensive has put pressure on the Socialists, who have so far boasted that they are helping particularly low-income Spaniards to weather the great crisis.
The PP regional government only announced on Monday that it would abolish the wealth tax. This also has internal Spanish reasons. It is not only in Andalusia that people are tired of entrepreneurs and other wealthy people Madrid draws: The capital region does not levy wealth or inheritance tax. The 17 regions have their own leeway for some of the taxes, which the PP is now using with a view to the super election year of 2023, at the end of which parliamentary elections are due. In Murcia, Castile-Leon, Galicia and Madrid, the Conservatives want to cut income taxes and other levies.
VAT on gas reduced to five percent
"There should be no tax havens in either the EU or Spain," criticized Finance Minister María Jesús Montero. Only 0.2 percent of all Andalusians would benefit from the new Andalusian regulation, while more than 90 percent of all Spaniards would benefit from the government's tax cuts, sources in Madrid said. This week, the VAT on natural gas was reduced to five percent.
In order to finance the relief for the lower-income Spaniards, richer Spaniards should also make a contribution – after energy companies and banks. So far, the finance minister has only spoken of the "large fortunes of our country, which are called upon to temporarily make an additional effort". Budget deliberations are still ongoing, but Montero gave a hint as to who tax increases could affect. "When we talk about the rich, we mean millionaires". Ultimately, it's only about one percent of taxpayers, she said soothingly, because the government wants to protect the vast majority of taxpayers.
According to press reports, the new “Montero tax”, as it is already called, which is said to be limited to two years, would have to be paid not only by millionaires, but by all of the approximately 115,000 people in Spain who have an annual income of more than 150,000 euros. Prime Minister Sánchez has been trying for some time to get his PSOE party out of the persistent polling low by swinging to the left. He attacked companies enriched by the crisis, introduced special taxes and promised to "defend the working class".