The PSOE says that it will change the law to avoid the PP tax cuts, but not this legislature

The announcement of Juanma Morenopresident of Andalusia, to eliminate the Wealth Tax from 2023 to “compete” with other communities in attracting capital and talent has upset the Government and its partners.

From the Executive they have assured this Tuesday that they would like to change the current financing model to avoid what they consider tax dumping by the autonomies governed by the PP, but that can no longer be this legislature.

“The Executive is always studying how to harmonize heritage”, say government sources. And they add: “It is an organic law and any figure that is touched has to be within that framework.”

[Juanma Moreno utilizará la supresión de Patrimonio para atraer empresas de Cataluña a Andalucía]

Therefore, they recognize that this issue will not be able to be addressed before 2024, both due to the complexity of the project and the Government’s intention to have both autonomous communities -since in each one it would affect differently- as with the agreement of the Popular Party.

From the PP they admit that they still do not have an elaborated plan on the financing model. “They are not going to count on us. “Would you study for an exam that you already know in advance that you are not going to pass?” asks a prominent leader.

The fact that regional taxation is not addressed before the end of the legislature may cause internal problems for the PSOE. “Will Juan Lobato appear against Ayuso defending a generalized tax increase in the Community of Madrid?” Some parliamentarians wondered this Tuesday.

On the other hand, the discourse of possible recentralization of taxes proposed by some, as Minister José Luis Escrivá has openly done, is hardly at home with the nationalists, partners of the Government.

The Government spokesperson and Minister for Territorial Policy, Elizabeth Rodriguezhad to settle the controversy raised by the minister: it is a “personal opinion,” he asserted.

Also the Andalusian Minister of Finance, Caroline Spainasked him to respect his powers and, incidentally, reproached him for the fact that the socialist government of Jose Luis Rodriguez Zapatero suspended this rate in the years 2008, 2009 and 2010.

The Government of the PSOE and United We Can maintain that the tax must be part of its fiscal policy and has long announced measures to limit its reductions. Meanwhile, the regions governed by the Popular Party increasingly limit this tax figure and other similar ones, such as Inheritance and Donations.

[Moreno a inversores de Cataluña: “Aquí está su tierra y no nos vamos a independizar nunca”]

However, in Europe is about a dying tax. Only Switzerland and Norway maintain it, while in Spain only Madrid and, since yesterday, Andalusia are the only ones that have this tax subsidized at 100%.

taxpayer flight

Specifically, it is a tax that must be paid by taxpayers from 700,000 euros of assets, excluding 300,000 corresponding to their habitual residence. The objective is to increase collection via personal income tax with the arrival of new filers attracted by the tax relief. Hence, Moreno gave a special wink to investors in Catalonia: “Here is their land and we are never going to become independent because we are a proud part of Spain.”

This tax represents 0.6% of the region’s tax collection. As indicated by the Board, the decision to suppress it has been adopted after ten of the 20 taxpayers who contributed the most to the public coffers ceased to be declarants in Andalusia in 2020.

The Andalusian Government has done its accounts. To compensate for the loss of the 95 million that are entered annually, via Patrimony, 7,200 new taxpayers would have to reach the community in 2023. Hence, it also wants to scratch in Valencia and Madrid and encourage the foreigners who usually spend a few months a year in Andalusia to make this community their fiscal residence.

But this tax cut is not intended only for those with higher incomes, as the PSOE criticizes, but rather the deflation of the first three sections of personal income tax will benefit 80% of Andalusianswhose salaries are below 25,000 euros.

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