Spain will temporarily tax large fortunes extra

by Lorraine Williamson
extra tax

MADRID – The Spanish Ministry of Taxation is working on a special tax on large fortunes. This extra tax will be introduced temporarily from 2023. 

Tax Minister Montero announced this on Thursday after the parliamentary debate in which parliament approved the non-financial expenditure ceiling. That was an essential preparatory step for drawing up the General State Budgets. 

The minister gave no details about the new tax. In any case, the aim is to increase the collection of large fortunes and incomes. “(…) we will work on a temporary formula and later the circumstances will show whether or not it should be extended,” said the minister. 

She explained that this tax will be similar to the two taxes aimed at credit unions and large energy companies. These generally last two years. She also indicated that these are millionaires “who make up no more than 1% of the citizens of Spain”. 

PP regions are lowering wealth tax 

On Wednesday, Montero responded to the debate that arose after the latest tax cuts announced by the autonomous communities governed by the PP. She denied that the state was exploring ways to make large fortunes and contribute more to the Treasury. 

Andalucia announced earlier this week that it would completely abolish the wealth tax. Madrid is already doing this and the Murcia state government is studying such a measure. 

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The left-wing parties in parliament are happy with the move by the Sánchez government. They just think it should have been introduced earlier. Unidas Podemos, for example, already proposed in June last year to tax large fortunes extra through a new law. This was rejected by the socialists at the time. 

Green light for a historic spending ceiling 

Congress on Thursday debated the non-financial spending limit for next year’s general state budgets. The government approved the spending ceiling in the Council of Ministers last July. It puts the planned spending for 2023 at €198,221 million. That is 1.1% higher than for 2022. 

For the third consecutive year, the government will not meet the deficit targets set in the Fiscal Stability Act. It is a legally guaranteed violation in “extraordinary emergencies”, such as the war in Ukraine and the energy crisis. 

“This is a historic figure. Never before have public funds of this magnitude been available to citizens,” said María Jesús Montero in Congress. 

Risks to fiscal stability 

However, the opposition blames the government for not submitting a plan to rebalance the accounts after three years of suspension of fiscal rules. PP deputy Elvira Rodríguez acknowledged that the economic situation is “extraordinary”. That is why the main opposition party abstained from the vote. Rodriquez said he was concerned about the risks to financial stability that the policy could entail. 

Vox: “Harmful and irresponsible” fiscal policy 

Vox, for its part, has voted against it, accusing the government of pursuing a “harmful and irresponsible” fiscal policy that has created a “structural imbalance in the accounts”. “We are the last ones in the recovery,” emphasised Iván Espinosa de Los Monteros. 

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