The announcement that Andalucia will abolish the property tax has caused an unexpected breakthrough in an issue, that of taxation and regional financing, which has been bogged down for many years. The wealth tax, in particular, raises great passions. Passions that hide some uncomfortable truths. We list them:
Spain is a rarity
Only Switzerland and Norway have a comparable tax
Despite the efforts of the Spanish government, which insists that “Spain is not an exception in Europe”, the truth is that the wealth tax does not exist in the EU as it is conceived in Spain. And in the rest of Europe, only Switzerland and Norway have it. In France and Portugal, large accumulations of real estate assets are taxed, and in Italy, assets held abroad.
In Spain it is paid little
The Spanish fiscal pressure is one of the lowest in Europe
As much as citizens may have the opposite perception, the data are stubborn and show that few taxes are paid in Spain compared to the rest of the EU countries. Only the countries of Eastern Europe or Ireland (a quasi-tax haven) have lower revenue than Spain compared to the size of their economy. This is an eternal problem that no Spanish government has faced seriously and that conditions any debate on taxation.
“With this misery of income, the technical discussion about which is the most appropriate tax seems idle to me”, explains Josep Oliver, from the UAB. Oliver recalls that both the IMF and the OECD are asking Spain to raise tax collection and warns that, without more income, “inequality is reaching levels that are not socially tolerable”.
The really rich don’t pay this tax
The exemptions make the tax fall on “average assets”
Among the experts consulted by the ARA, the consensus is that the really rich avoid paying wealth tax. “From the moment when there are exemptions for family businesses, it’s basically a tax that affects average assets”, declares Antonio Durán-Sindreu, managing partner of the law firm that bears his last name. “The big void is for people who have real estate assets, create companies and are exempt from paying because they pass it off as if it were a family business”, he adds.
The Generalitat made its own estimate and, using data from 2015, calculated that it should collect 80% more for this tax (that is, practically double the income). The main source of fraud, this study concluded, is that those affected declare less than they actually have abroad.
“The big challenge that any legislator has is this: the big estates are not paying what they should be paying for their economic capacity”, says Durán-Sindreu.
Andalusia is not Madrid
The community of Moreno Bonilla lives off the solidarity of other territories
It is one thing that the Community of Madrid decides to abolish this tax: although favored by the capital effect, which allows it to do tax dumping, Madrid can afford to lower taxes because it contributes more than it receives to the common purse. This is not the case for Andalusia, a net recipient of regional funds, without which it could not sustain itself. According to the latest fiscal balances published by the Ministry of Finance, in 2017 Andalusia received 7,700 million more than it paid (and Catalonia paid 10,000 million more than it received). “I would say that the receiving communities are clean [de fons] they should not be at liberty to remove this tax. It doesn’t make any sense, it seems to me an abuse”, says Josep Oliver.
There is no rich flight for this reason
Some experts warn that this can slow down the attraction of highly qualified workers
Tax offices are used to receiving clients who want to move to Madrid to pay less tax. The data, however, do not show that this has a very significant effect. Since 2012, the taxpayers who pay this tax in Catalonia have grown by 16%, while in Madrid they have done so by 19%. The data are not exactly comparable, since in Madrid only those people who have more than 2 million euros in assets must declare this tax (even if they do not pay it later because it is 100% subsidized, they must declare it ). Be that as it may, “the studies do not show that there is a flight of rich citizens due to this tax, beyond the anecdote”, argues Guillem López Casasnovas, professor and member of the commission that drew up the latest tax reform proposal .
According to other experts, however, the risk is not the flight, but that, with this tax, the attraction of workers with high wages will be stopped. This is what professor Jordi Galí thinks, who warns that “very aggressive taxation” can make companies with highly qualified workers prefer to establish themselves in other countries. Ultimately, he warns, “this will end up affecting the humblest layers of the population, since the quality of public services that a society can offer is linked to the per capita income it is able to generate”. “This impoverishment – Rebla – is very gradual and not very visible and, therefore, tends to be ignored by politicians. Raising revenue in the short term with a tax that affects a small percentage of the population is much more attractive, regardless of the medium term consequences”.
Esquerra has not obtained fiscal harmonization
In 2020, he agreed with the PSOE on fiscal equalization
In November 2020 Esquerra Republicana agreed the State budgets with the PSOE. As Gabriel Rufián announced, one of the points of the agreement was the creation of a group of experts to reform the taxation of large fortunes and harmonize it throughout Spain. Two years later, everything is the same and nothing has been harmonized. From the Treasury they limit themselves to saying that they have fulfilled their part of the deal: a commission of experts was created, they say.