2023-10-06 04:15:00
Asturias, practically immobile in the race for tax cuts in recent years, has become the third region with the highest tax burden in Spain, only below Catalonia and the Valencian Community. This is indicated by the latest “Regional Tax Competitiveness Index” prepared annually by the liberal think tanks Tax Foundation, based in Washington (USA), and Foundation for the Advancement of Freedom, based in Madrid. Asturias has lost positions in competitiveness in recent years as a result of the few tax reforms carried out and the reductions applied in other autonomous communities, mainly in Income Taxes (IRPF), Wealth and Inheritance.
The Community of Madrid appears once again as the most competitive region at a fiscal level, followed by the three Basque provincial territories – Álava, Guipúzcoa and Vizcaya, in that order – and Andalusia. Asturias is ranked 17th. of a total of 19 territories (the autonomous communities and the Basque provinces with their provincial estates) after losing one place compared to last year and four compared to five years ago within this index that is prepared with five components: the tax on Income Tax (IRPF), the Wealth Tax, the Inheritance Tax, the Tax on Asset Transfers and Documented Legal Acts, and the regional taxes themselves.
“Asturias’ decline is due to the fact that the other autonomous communities have used fiscal reforms, improving their competitive position, while Asturias has remained stagnant or has worsened its position” in each component analyzed, point out the authors of the study, who also highlight that, in Compared to 2017, Asturias has one more tax of its own and that in the last year “the only important reform” has been the expansion of regional deductions in personal income tax.
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“Asturias needs an urgent reform of the Income Tax and, especially, the Inheritance Tax, since Asturians are, by far, those who pay the most for this tax,” says the analysis carried out by the Tax Foundation and the Foundation for the Advancement of freedom. Within the competitiveness subindex of the Inheritance tax, Asturias will appear in last place, in 19th position. The study highlights that in Spain the maximum rate of this tax is 34%, but that in Asturias it has risen to 36.5%. “However, when applying the multiplier coefficients based on the kinship group and pre-existing assets, the tax rises to 87.6% in Asturias and Murcia, the highest tax in all of Europe,” the study states.
In the competitiveness subindices of the IRPFF, the Wealth Tax and the Tax on Property Transfers and Documented Legal Acts, Asturias appears in 11th place. The Principality has been one of the few communities that decided not to deflate their personal income tax income brackets despite the fact that the rise in prices, and with it salaries, causes a “cold increase” in taxes without modifying them (the taxpayer can jump between tax brackets due to salary increase without gaining purchasing power if that increase is less than inflation). The Government of the Principality opted for an alternative route that consisted of a selective increase in regional deductions.
And finally, in the subindex of competitiveness of its own taxes, Asturias appears in 17th place. by having six taxes of its own, among which the tax on the environmental effects of water use, known as the sanitation fee, stands out for its collection.
Tax Foundation and Foundation for the Advancement of Freedom point out that their Autonomous Tax Competitiveness Index (IACF) allows rulers, businessmen and taxpayers of a community to evaluate, measure and compare their tax system with that of others. “This index has been designed to analyze how well structured the tax system is in each autonomous community and also serves as a guide so that each region can improve its tax system, making it more competitive and attractive for businessmen and residents,” the authors point out.
In the case of Asturias – the third community that obtains the worst results after Catalonia and the Valencian Community – the two liberal foundations launch several recommendations to gain competitiveness, although without evaluating the effects it would have on the reduction in revenue.
recommendations
They propose to reform the personal income tax by reducing the tax rates of all brackets by 2.5 points, with a maximum tax rate of 23%, to reach a joint maximum state and regional marginal rate of 47.5% – similar to that of Germany – and deflate Every year, all personal income tax brackets and personal and family minimums are automatically adjusted with inflation. Also drastically reform the Inheritance and Donation tax by raising the exempt minimum (300,000 euros) to one million euros, eliminating the multiplier coefficients based on the degree of relationship and assets, and extending the reductions to collateral relatives. And finally, repeal the Wealth Tax or increase the exempt minimum to one million euros, with a maximum tax rate of 2.5%, and reduce the regional taxes from six to three.
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