Thursday, December 8

The OECD notes a global trend of rising taxes on the properties of the richest

The OECD has published this Wednesday its annual report on tax reforms among its partners and other countries. The agency focuses a part of the study on the evolution of property taxes. This includes taxes such as the IBI, Inheritance or Heritage, which is in the midst of a political storm this week due to the PP’s policy of reduction in the communities where it governs. The study carried out by the organization that encompasses the main economies of the world confirms that there is an increase in taxes on the properties of the richest.

“While there have been fewer property tax reforms [2020] Compared to previous years, the existing reforms are clearly focused on promoting progressivity and fairness in the property tax, ”says the document published by the OECD on Wednesday. “Property tax reforms predominantly involved tax increases, either through increases in tax rates or measures to broaden the tax base,” he adds, noting that they were primarily aimed at “individuals or entities that use properties predominantly as an investment vehicle, as well as to higher net worth individuals.”

International trends are thus directed towards increasing the fairness of the property tax system for the richest segments of the population. This week this type of taxation is precisely the focus of the debate in Spain due to the announcement by the Junta de Andalucía of the 100% rebate on the Wealth Tax, as Madrid already did. The Government has rejected this measure that puts at risk the future of a tax that collects 1,200 million a year in Spain.

The OECD includes in its property taxes not only Equity, but other figures, although it points out that “income growth” has been taking place in recent years. Although, they continue to have a limited contribution in most countries. The agency points out that the main source of income in this section of taxation is that related to real estate, which in Spain is fundamentally linked to the IBI charged by municipalities. Recent property tax reforms have generally increased tax burdens on wealthier taxpayers and real estate investors, with the goal of promoting fairness in property tax systems.

The OECD report also includes a section on the fiscal response that governments are giving to the energy crisis caused by the war in Ukraine. The agency is critical of some of the general proposals that have been implemented to solve the problem of energy prices, especially as the situation is expected to last longer than initially expected. “As long as energy prices remain high, support must strike a balance between effectiveness, budget and implementation costs, focusing on the strongest needs and ensuring synergies with climate change and security goals. energy in the longer term”, says the OECD.

Among other issues, the document explores the measures that have been implemented for price limits, as well as compensation for the price of gasoline, as in the case of Spain. “While they are relatively simple to implement, they tend to be untargeted and the benefits can accrue disproportionately to large energy consumers, who often have higher incomes,” he emphasizes. “Price controls can also dampen price signals, limiting the incentive to save energy or move away from fossil fuels,” she adds.

He also criticizes the tax cuts on energy. In Spain, different reductions have been approved, such as VAT on the electricity bill, special taxes or, this week, VAT on the gas bill. “Unlike price controls, energy tax cuts do not affect energy providers who still sell their products at market prices and prevent revenue losses. However, tax revenues decline immediately and the budget cost can be high over time. “For example, a reduction in the VAT rate does not guarantee a reduction in the consumer price of the same magnitude,” the agency stresses.

Thus, the OECD aims to focus the measures on the most “vulnerable” population. “Innovations in transfer mechanisms may be needed to ensure that groups most vulnerable to the energy price crisis are reached,” the agency recommends in the report. This targeting, he adds, should also focus in the case of companies on those that were viable before the price crisis.

Finally, the OECD doubts that this type of aid that is being applied is in line with the objectives of sustainable development and ecological transition. For this reason, it puts pressure on the countries so that they do not leave aside this transformation of the economy. “Persistently high energy prices as a result of the fallout from the war in Ukraine show that fossil fuels have become a less reliable source of energy, raising energy security concerns, especially in Europe,” concludes.