In the countdown for the Government to receive the tax reform proposal commissioned by the Minister of Finance, Maria Jesus Monterothe Constitutional Court has revealed that there are taxes that we Spaniards have paid religiously for decades and they are not well formulated or are directly “confiscatory”.
All this in a context of ideological war in which the Government of Pedro Sanchezthe Generalitat and some socialist barons, such as Ximo Puigaccuse the Community of Madrid of fiscal ‘dumping’ for having “few and low taxes”.
The data of the collection of the old municipal surplus value by regions question this discourse by showing that Madrid is the one that collected the most for that concept that goes to the municipal coffers.
But, in addition, its confiscatory nature in cases in which it is sold at a loss or in which double taxation leaves the citizen shivering for demanding more than 100% of their profits, comes to agree with the Community of Madrid in its bonuses in the share of the Wealth Tax and in most cases of Inheritance and Donations.
Patrimony is an exclusive tax in Spain that taxes accumulated wealth. It is known that in the case of the Spanish, saving is synonymous with real estate. According to data from the Treasury, no less than 93.95% of the savings of Spaniards is divided between movable capital and real estate.
The Bank of Spain places 57.3% of household savings in their main home and 31.6% in “other real estate”. This is the joint X-ray of citizenship, but it is known that those who have the bulk of their savings in brick they are the middle classes, since the highest incomes tend to invest part of their money in other assets.
If we look at these data, it can be seen how around 80% of the assets of the people of Madrid already pay taxes. Either by the municipal capital gain -in case of sale or inheritance and donations-, or by the IBI (Real Estate Tax).
This other tax is even juicier than the municipal capital gains for public coffers because it leaves more than 13,496 million euros a year. In this case, Catalonia (7.5 million inhabitants) is the region that collects the most, followed by Madrid (6.6 million inhabitants).
In other words, in the Community of Madrid we do pay taxes. Another thing is that the collection is better suited than in most of the autonomous communities to the principle of “non-confiscation” established by the Constitution and that the Constitutional magistrates set in a 2017 ruling at 100% of the profit, compared to the 75% from France or 50% from Germany.
Another of the battlefields against Madrid are its bonuses in the Inheritance and Donations quota that, let us not forget, do pay municipal capital gains.
However, for the nephews of the ‘rich’, inheriting in Madrid can also be a problem similar to that in the rest of Spain. And if not, let them tell Dimas Gimenoformer president of El Corte Inglés, due to the difficulties he had to face with the Treasury for the taxes on account of his uncle’s inheritance, isidore alvarezand that his cousins and daughters of the deceased were able to draw for being direct relatives.
Recently renewed the presidency of the Community of Madrid, Isabel Diaz Ayuso he promised to expand bonuses between uncles and nephews and between siblings. He probably did not do it thinking of the ‘rich’ – who give few votes – but of the middle classes.
Although what is carried now is to speak of ‘freedom’, in reality the people of Madrid vote with their pockets in mind. And as a former Ciudadanos member recalled in private these days, when the orange party included in its electoral program for the Community of Madrid lowering taxes on the middle classes even more, a candidate without spark, like Ignatius Aguadomanaged to put the PP in serious trouble to reach Puerta del Sol.
The central government will continue to heat up the debate against the taxation of Madrid. But you should be careful, lest the rectification that the State has had to do with the municipal capital gain now encourage some to battle in court against other taxes indicated by the Institute of Economic Studies (IEE) in its report Private property in Spain.
Quite a ‘danger’ for the Treasury because it could be that the judges end up establishing in Spain a threshold similar to that of France or Germany within the constitutional principle of “non-confiscation”. And in that case, Sánchez, Montero and their fellow travelers in the ‘dumping’ refrain would have to agree with Madrid.
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