2023-10-19 18:02:43
The Constitutional Court is already working with the possibility of giving way to the tax on large fortunes launched by the Government this year, with which it tries to unify the payment of the Wealth Tax, subsidized almost entirely in some autonomous communities compared to to those who kept it intact. If it definitively endorses the tax, the Government will have its hands freed to extend its application without legal setbacks for at least another year, as planned.
The Plenary Session of the Constitutional Court will meet next Tuesday to begin formally studying the appeal that the Community of Madrid, chaired by Isabel Díaz Ayuso, had presented against this tax on the grounds that its implementation violated the autonomous fiscal powers, as well as the rights of taxpayers for understanding that the principle of legal certainty was violated. It will do so based on the presentation prepared by the progressive magistrate María Luisa Balaguer.
In addition to Madrid, the governments of Andalusia, Galicia and Murcia have challenged this new tax. Both the Madrid Executive and the Board requested that the application of the tax be provisionally suspended, but the Constitutional Court denied it.
However, the draft with which the Constitutional speakers are working would maintain the idea that the State has tax power to apply this tax throughout the common regime territory, and that it does not conflict with regional powers. Furthermore, they would consider that their payment does not violate the rights of taxpayers nor is it discriminatory.
In the case of the Basque Country and Navarra, the Government handed over the regulation, management and collection of the fee to them. The Basque provincial councils have just softened it for taxpayers with greater wealth.
Temporary or permanent
The so-called Solidarity Tax is levied on the net assets of individuals with an amount greater than three million euros. This figure was called to replace the autonomous labyrinth of the Heritage labyrinth that was increasingly subsidized in the communities. It was a demand from the Executive for the solidarity of the rich with the population as a whole. And indirect harmonization to avoid ‘dumping’ between the territories.
In principle, it was intended to be applied in the years 2023 and 2024, with the assets of 2022 and 2023, respectively. That is the Government’s idea when the president, Pedro Sánchez, announced its implementation during the summer of last year. A ruling against the Constitutional Court would have paralyzed its collection next year.
But if there is finally a constitutional free way, the Executive could even consider a less temporary and more structural implementation without legal ties. That is, make it fixed for longer than estimated. This was even suggested by the Minister of Finance, María Jesús Montero, last September when she indicated that the tax had fulfilled the “political objective” of guaranteeing “proportionality” in the payment of taxes. And she did not rule out making it permanent if it was found that this is the best way to guarantee that all taxpayers pay their fair share throughout the country and the tax burden does not fall primarily on the middle classes.
In the Budget Plan that Spain sent to the European Commission this Sunday, the Executive pointed out that there would be no changes in current tax policies, although it is in office. In fact, it estimates an increase in tax revenue for next year of about 6.5 billion euros. Of them, the majority (about 5,000 million) would be explained by the end of the support measures for inflation and the war in Ukraine (end of the minimum VAT on electricity and food, electricity tax, etc.) or the increase in social contributions, worth 1,000 million.
Less revenue than expected
Once the first payment of the tax on large fortunes has been settled, the collection has, so far, been lower than that estimated by the Treasury. The Tax Agency has received 623 million euros for this tax figure, an amount corresponding to the 2023 settlement.
However, this figure is far from the forecasts announced at the time by the Ministry of Finance when the tax was approved. At that time, the department led by María Jesús Montero spoke of 1,500 million euros that the treasury would obtain through this tax. With the first settlement carried out, the amount collected has been 60% lower. This amount corresponds to the settlement made by 12,000 citizens, which represents 0.1% of taxpayers in all of Spain. On average, they have paid 52,000 euros for their assets.
The Treasury considers that there is no such gap between the estimate and reality as they are “consistent” with the Government’s forecasts. He explains that he targeted a “collection potential” for the tax on large fortunes that reached 1,500 million, “under the assumption that all autonomous communities would apply a 100% bonus on the Wealth Tax.” Although, in reality, not all regions have this tax benefit despite the latest changes introduced in some territories such as the Valencian Community or Extremadura.
The configuration of the tax on large fortunes has revealed some cracks that affected taxpayers could take advantage of to avoid the impact of the tax. This tax is designed so that the citizens of the communities in which this tax was practically not paid because it was highly subsidized, would have to assume it through the extraordinary state tax. That is, they either paid it through the Wealth Tax – the historical one – or with the new Solidaridad de las Grandes Fortunas.
The most affected would be those of Galicia, Madrid or Andalusia, the autonomies for which this rate was precisely designed, given that they are the ones that at the time most generously subsidized their high net worth. And it has been precisely the taxpayers of those territories who have benefited the most from the problems derived from the approved regulations and which have allowed significant savings for their pockets and the consequent reduction in tax collection.
The key to the error was in the so-called tax shield, by which the payment of taxes (calculated by adding the Personal Income Tax, Patrimony and Solidarity quota) cannot in any case exceed 60% of the Personal Income Tax tax base. “If this percentage is exceeded, the solidarity tax rate is reduced to 80%,” they recalled from the Independent Authority for Fiscal Responsibility (AIReF) at the time.
But the wording of the final settlement model published in June in the Official State Gazette (BOE) implied that large fortunes will be able to compute in the calculation what they would have to pay for the Wealth Tax without a bonus, and not only the amount they would have. to really pay if, for example, they are in Madrid or Andalusia, where the discount is 100% – that is, they would not have to pay anything – or in Galicia, where it is 50%. Thus, it has been much easier for them to reach the 60% that allows access to the deduction.
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