Property taxation, income, business taxes and, of course, housing. The coalition government is internally negotiating the form and intensity of the future tax reform in Spain, a process that, given the difficult parliamentary arithmetic, It will likely end with small partial changes rather than a major remodeling.. In this context of limitations, Sumar is putting pressure on the PSOE so that the modifications go as far as possible and affect taxes such as personal income tax, wealth, inheritances and donations or corporations. The main objectives are to advance the progressiveness of the system, harmonize territorially, plug the holes in business taxation and contribute to solving one of the big problems that the Executive now faces: housing accessibility and rental prices.
“We are at a key moment, immersed in a very important negotiation with the PSOE in which, of course, we want to continue advancing,” said the second vice president of the Government, Yolanda Díaz, this Thursday at the conference. The pending tax reformorganized by Sumar in the Congress of Deputies. “We know that the PSOE does not want a comprehensive tax reform that follows the recommendations of the white paper, but we continue to press because this is the great reform that our country has pending,” added the also Minister of Labor in a room full of academics and experts in the matter.
The Government has been negotiating the General State Budget project for weeks and Sumar already made public its proposals on tax matters for public accounts a month ago, among which are a tax on large inheritances or a toughening of the tax on the rich. However, the minority partner continues to press on issues that are sensitive for the Executive and that have been gaining prominence in recent weeks. One of them is housing, which Carlos Martín, spokesperson for Economy and Finance of the group, insisted on during the event. The deputy from Sumar also recalled some of the fiscal suggestions that they launch along these lines, such as the possibility of increasing taxes for properties that have a use other than habitual residence or raising the state taxation of tourist apartments – up to a VAT of 21%—with the objective of “drastically cutting its profitability.”
Regarding the tourist homesSumar also proposes that in both personal income tax and corporate tax the deductibility of financial, amortization and home improvement expenses be eliminated from the calculation of their returns when it is located in stressed areas. And, again in hot market areas, the minority partner wants to increase the imputation of real estate income to 20% in personal income tax in periods of non-occupancy. Other proposals could be added to these proposals, suggested Olga Cantó, professor of Economics at the University of Alcalá, such as that the income from unproductive capital, that is, from the rental of real estate, be taxed at the general personal income tax rate and not at the savings rate. , which is lower. Cantó also put on the table the possibility of “increasing what is paid for the imputed rents of empty homes.”
However, beyond housing, Sumar defends that significant measures are needed in the tax area that completely turn around the current tax system. And that was one of the proclamations that all the experts invited to participate in a day organized in some way to pressure the majority partner repeated in unison. “We are subject to fiscal rules that force us to contain the growth of spending,” recalled Santiago Lago Peñas, professor of Public Economics at the University of Santiago de Compostela and senior researcher at Funcas. Therefore, “if we want to spend more money on housing, family, social protection and R&D, we have to carry out this reform in depth.” “We are in a time of unparalleled economic growth, with low unemployment rates and corrected inflation. There is no better time than now to undertake it,” said Cantó.
For the second vice president, one of the keys in this debate is not whether taxes should be lowered or raised, but who pays them. And in Spain, Díaz assured, there is room to undertake tax increases focused on large companies and incomes and on the highest assets. The country, recalled José María Labeaga, former director of the Institute of Fiscal Studies, has a tax burden notably lower than the community average. In the European Union, this indicator is around 42% of GDP, while in Spain, once Eurostat makes public the new data after the correction of the gross domestic product by the INE, the pressure will be around 37%. There is, therefore, a margin of more than 60 billion euros to act.
One of the levers that can be started, continued Susana Ruiz, head of Tax Justice at Oxfam Intermón, is to achieve greater collection “from those who have the most, in order to also combat the strong concentration of wealth.” Carlos Cruzado, president of the Union of Technicians of the Ministry of Finance (Gestha), urged correct the rate of capital returns in personal income tax to create new sections and raise rates“in order to bring them closer to those at work and provide more progressiveness to the system.” In Ruiz’s opinion, loopholes in the wealth tax should also be closed, limiting, among other aspects, the exemption to family businesses. And regarding this tax figure, Cantó insisted that, although the distribution of wealth does not change, it is important to maintain it due to the psychological effect it has on taxpayers at the lowest part of the table: “Many times, the population has the feeling that he is paying more taxes than those who have the most.”
In business taxation, Ruiz insisted, the tax should also be corrected to reduce the gap between the accounting results recorded by large companies and the tax base on which taxes are then paid. And if we look to the horizon and a major reform, the experts also insisted on transcendental changes, such as rethinking the reduced VAT rates and making the presentation of personal income tax mandatory in the lowest income brackets with the aim of knowing the situation of those taxpayers, who could receive negative taxes or offsets.
