The Spanish government, led by Prime Minister Pedro Sánchez, is preparing new fiscal policies aimed at increasing taxes on the wealthy and introducing a new tax on large inheritances.
These proposals are part of ongoing discussions between the socialist government and its coalition partner, Sumar, ahead of the upcoming budget negotiations. The goal is to address inequality and ensure a fairer distribution of wealth through progressive taxation.
Push for wealth tax reform
One of the key measures under discussion is the enhancement of the existing “solidarity tax” on large fortunes. Introduced in 2022 as a temporary measure, this targets individuals with assets exceeding €3 million. Sumar, led by Vice President Yolanda Díaz, is advocating for an increase in the tax rates on high-net-worth individuals. The aim is to further redistribute wealth and provide additional funding for social programs. This initiative aligns with Sánchez’s vision of a more equitable system that protects middle and working-class families while holding the wealthy accountable.
During a recent speech, Sánchez emphasised the need for a more progressive tax system: “We will continue to advance towards a fairer fiscal policy. Herewith, ensuring that those who have the most contribute more to our society. This is not about punishing the wealthy but about protecting working families from an unjust system.”
Inheritance tax on the table
Another significant proposal being discussed is the creation of a national inheritance tax. This new tax would target large inheritances, following a model similar to the existing wealth tax. It would be designed to counteract policies in certain autonomous communities, such as Madrid and Galicia, where inheritance taxes have been reduced or abolished. By introducing a national tax on large inheritances, the government aims to address disparities in wealth distribution and ensure a more consistent tax policy across Spain.
Improving income tax progressivity
In addition to taxes on wealth and inheritances, Sumar is pushing for reforms to the Personal Income Tax (IRPF) system. The goal is to ensure that capital gains are taxed more similarly to income from work, closing the gap between the two. This reform would make the tax system more progressive and align Spain’s tax revenue more closely with the European Union’s average.
The government also intends to ensure that large corporations pay at least 15% tax on their profits, in line with global and EU agreements. This would help close tax loopholes that allow large companies to reduce their effective tax rates.
Budget negotiations
These fiscal proposals are expected to be part of the budget negotiations between the PSOE and Sumar, which were paused earlier this year due to elections in Catalonia. With the return to budget talks, both parties aim to solidify their shared commitment to fiscal reform.
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