The Spanish government said on Thursday that residents whose wealth exceeds €3 million will be subject to a new asset tax during the next two years, 2023 and 2024, as part of its upcoming budget that will need to be approved by the Spanish Congress.
Budget and Public Finances Minister María Jesús Montero said the temporary wealth tax, which could affect 23,000 people, or 0.1 % of taxpayers, was one of ‘solidarity’.
Montero said that people with holdings of €3-5 million will be taxed 1.7% and those whose personal worth is €5-10 million will be taxed 2.1%. Individuals with fortunes above €10 million will pay 3.5%.
The tax is part of a range of adjustments planned for Spain’s upcoming budget that are aimed at alleviating the hardship caused by rampant inflation and soaring energy prices.
The government also plans to increase the income tax rate from 26% to 27% for people earning more than €200,000. The tax for incomes above €300,000 will go up to 28%, an increase of 2%.
The PSOE socialist party and its junior left-wing coalition partner, Podemos, agreed on the measures, which are expected to bring in €3.1 billion over the next two years. The government said the money would be used to finance initiatives to help people with lower incomes.
The government also plans to reduce the income tax on annual salaries of up to €21,000. The budget minister said this will benefit some 50% of the workforce given that the average annual salary in Spain is €21,000.
Montero said the changes would make Spain’s tax system ‘more progressive, efficient, fair and also enough to guarantee social justice and economic efficiency’.
The governing parties also agreed to reduce the sales tax on feminine hygiene products from 10% to 4%.
Spain recently approved windfall taxes on large energy companies and banks [ALSO READ: Spain seeks 4.8% windfall tax on banks, 1.2% on energy firms to beat cost of living crisis] and has temporarily slashed the sales tax on natural gas from 21% to 5%. ALSO READ: Spain to reduce VAT on gas to 5% from October until at least the end of year.
Inflation in Spain slowed in September to 9% from a nearly four-decade high, due mainly to a drop in electricity and fuel prices, as well as a public transport price cut, the provisional data from the National Statistics Institute (INE) showed on Thursday. ALSO READ: Inflation in Spain slows to 9% in September.
Spain’s regional governments also have some flexibility on taxation. Two of them run by the main right-wing opposition group, the People’s Party (PP), have cut property taxes. Regional governments run by the PSOE plan other tax relief measures for low income earners.
El Gobierno ha presentado un paquete de medidas fiscales que incidirán en la justicia social y la eficiencia económica— La Moncloa (@desdelamoncloa) September 29, 2022
Objetivo➡️avanzar en un sistema fiscal más justo y reforzar el Estado del Bienestar
Lo explicamos en este hilo👇🏻 pic.twitter.com/xj5YOzvJey
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Expect those who make the wealth to leave Spain over the next two years or at the very least find ways to make thier money leave which in the end will benefit no one.