Wednesday, October 4

Ayuso tries to shield himself with a law against the Government’s announcements on tax harmonization

The battle for low taxation initiated by the president of the Community of Madrid, Isabel Díaz Ayuso, following the path of her predecessors in office, has led the regional government to give the green light on Wednesday to the bill on Financial Autonomy with which it intends to “shield itself” against the announcements of the central Executive to seek a “fiscal harmonization” between regions.

“The objective is to protect the rights recognized in this matter to the region through the Spanish Constitution (article 156) and its Statute of Autonomy (article 51),” the Madrid Executive reported in a statement. In this way, he defends, the Community of Madrid is equipped with a new legal instrument that will allow it to “safeguard its powers in tax matters and deal with a so-called fiscal harmonization”.

“This initiative of the Government of the nation only seeks to raise taxes on the people of Madrid and reduce the freedom of the region to manage its economy,” they defend from the regional government. The Draft Law for the Defense of Financial and Fiscal Autonomy thus begins its legislative process for final approval in the Madrid Assembly.

The Madrid president already announced the measure this Tuesday. Ayuso assured that “no country prospers by directly attacking its capital. This attack only occurs in Spain.” “We are not going to raise taxes nor are we going to allow anyone to raise them through the back door, because that is what the people of Madrid have voted for,” he added and congratulated Esperanza Aguirre, accused in the Púnica case, for being the “driver of this liberal model. “The formula for the undoubted economic and fiscal success in Madrid is very simple: more and more people paying less taxes,” he added.

The latest tax cut approved by the regional government for this year reduces the regional section of Personal Income Tax (IRPF) by half a point. The impact of this rule will benefit the highest incomes. Whoever earns the most, saves the most. Who less, will notice very slightly the measure. The tax reduction occurred despite the fact that the Community of Madrid already had the lowest regional personal income tax bracket in Spain (along with the Canary Islands, which applies the island exception of 9%). The last tax reduction occurred in 2018, also a pre-election year, when the regional government with Cristina Cifuentes at the head approved a reduction from 9.5% to 9%.

The regional government also forgives large fortunes each year more than 1,000 million euros in Wealth Tax, to which is added the inheritance and donation tax subsidized at 99% between parents and children and spouses. For the next few months, the Executive is preparing a new reduction in this last tribute between brothers and uncles and nephews.