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Tuesday, September 27, 2022

The tax on large fortunes would replace the patrimony in areas where it is exempt, such as Madrid.

The Treasury will temporarily tax large fortunes who manage to evade wealth tax for their tax residency. According to informed sources, it will do so by creating a special tax that also affects regions that fully reward the heritage, as Madrid has been doing for years and Andalusia and Murcia will from next year. This formula, he points out, is the most logical from the fiscal architectural point of view.

The Minister of the Branch, María Jess Monteiro, called for “more effort” for the Great Legacy in Congress yesterday and said that “the government is working” on the possibility of creating a new special tax for the richest, in line with United v Can. proposal. The new tax figure, the details of which are not yet known, will come into force in 2023, when the ministry’s technicians will design their articles.

As explained by José María Molinedo, Secretary General of the Union of Finance Technicians (Gesta), “we believe that this will be a state tax to remove regulatory capacity from temporary tax communities” and thus avoid its abolition. There would also be no transfer of that income to Autonomy, “because there would be no point in giving income to the region which had previously abolished the tax.” In turn, for the purpose of avoiding double taxation in areas that do not abolish patrimony, “the amount paid shall be deducted to the extent of the consequence of the tax.” In other words, with this formula, taxpayers from communities without bonuses will not pay tax twice.

He estimates that these changes would allow about 1,000 million euros more per year to be recorded than the Gesta, which the Patrimony collects today. In total, about 2,300 million per year. The final figure is the result of adding 1,200 million euros received in 2020, thanks to this tax, which Madrid stopped entering, the only region that then completely exempted this tax figure.

The property tax generally affects taxpayers who have assets worth more than 700,000 euros, excluding the main residence up to 300,000 euros. However, from Gesta he believes that this equity limit can be raised to a higher figure, starting at around two million.

Alberto García Valera, partner in charge of the tax policy sector, also sees that it is possible for the Treasury to opt for a sort of redesign of the Patrimony and higher thresholds. This is “the most logical option, given that it is unlikely that income from work will be taxed even more”.

One possibility, he continues, is to amend the Law 19/1991 on Wealth Taxes to eliminate the possibility of bonuses, “but it is inelegant with autonomy.” He states that the most sensible thing from a legal point of view is a well thought out special tax on property of an extraordinary nature and that, to avoid double taxation, establish a deduction on the amount already taxed. It has a more complex element of economic justification, he explains, but “if it is expressed correctly, it can be a constitutional fit.”

With this measure, the central executive responds to the autonomy governed by the Popular Party and puts taxation at the forefront of the battle ahead of next year’s general elections.

However, the fiscal offensive goes beyond a temporary tax on large estates. European Commission sources have reminded the government this week that it remains committed to tax reform that should see the light of day in early 2023, according to Component 28 of the Recovery, Transformation and Resilience Plan signed with Brussels. Storm in the Eye traces controversial tax reconciliations between autonomous communities, which would bar some regions entirely from taxes such as patrimony or inheritance and donations.

As explained by the commission, the design of this reform is “in progress” and its main objective is the coordination and integration of state taxes at the regional level to avoid downward tax competition among autonomists, something that groups has also suggested experts who have drafted a white paper for tax reform. The same community sources insist that “aid should be given to the most needy and vulnerable families” in the context of rising prices. “More income is needed and collection needs to be as efficient and effective as possible.”

World Nation News Desk
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