The Basque tax on the rich: decaffeinated, a year late and in the air in Álava and Guipúzcoa

First, in December 2022, it was a no. The PNV and the PSE, the two parties that support the three Basque councils, agreed that the tax on large fortunes would not be applied in the Basque Country. The controversy was served, it was the best argument that the PP communities could cling to, with Isabel Díaz Ayuso at the head, to rebel and support the resources before the TC. Then came the nuance. It would be included in the economic agreement as an agreed tribute, as agreed with the Ministry of Finance, it would not be subsidized at 100%, the first possibility that the Basque institutions considered to make it void, but it would be made compatible with the wealth tax so as not to punish taxpayers twice. And almost a year later, the three councils have finally presented their proposal, watered down with respect to the national tax – in Spain as a whole, the tax begins to be applied from three million; In the Basque case, it will be from 3.2― and with the accusation by Bildu and Podemos that everything has been a strategy of the Jeltzales to not apply the tax.

In the best of scenarios, the tax will be applied in the Basque Country one year late – the councils hope to have it approved right at the end of the year – in the worst, never.. The PNV and the PSOE, which govern the three councils in coalition, have a majority in the General Meetings of Vizcaya, the provincial Parliament that must give the green light to the regional norm by which the tax will be approved, but they need the support of a third training in the chambers of Álava and Guipúzcoa. Bildu, which supported the approval of the tax in Congress and was one of the key votes for the measure to go ahead, has already warned that it will not support the proposal of the deputations. Podemos is not willing either if the current wording is maintained and the PP is head-on against the tax..

What will Vizcaya do if it sees that it is not approved in Guipúzcoa and Álava? Will the PNV assume a disharmonization between the three provinces? “This scenario has not yet been contemplated,” sources from the Vizcaya Provincial Council tell El Confidencial.. “The stage is completely open. It's still too early. We are confident that we will be able to approve it. Now the negotiation begins and there is a lot of room,” they defend in Guipúzcoa. However, the sources consulted in the latter province concede that if they finally do not obtain the necessary support, “we will have to see what is done, if it is harmonized or how it is managed.”. For their part, sources from the Ministry of Finance concede that if it does not finally come to light, “it would not have any legal repercussions,” only “political consequences.”.

It would not be the first time that the three Basque provinces, each with its own Treasury, have different tax systems.. But the reason would be different. In the 2011-2016 legislature, Guipúzcoa had its own tax on the rich, but it was thanks to a pact hatched between Bildu, then in charge of the Provincial Council, and the PSOE.. In the other two provinces –Vizcaya, governed by the PNV, and Álava, by the PP–, the measure was rejected. In the following legislature, the socialists became partners of the PNV and in the General Meetings they annulled what they had approved with the nationalist coalition.

The no of Bildu and Podemos

“The PNV has deliberately gone late to lose a year and, with a little luck, see if it is not applied,” denounced this Tuesday Iker Casanova, member of Bildu in Vizcaya.. For the party, the proposal of the deputations breaks with the spirit of the law that was approved in Congress and “empties the tax of its content.”. “All types are coincident with the estate tax. There is no pressure on high incomes, the tax on large fortunes will have no impact,” he explained, and specified that of the 17,000 people who pay the wealth tax in the Basque Country, 16,700 will be exempt from the large fortune tax, so It will only impact about 300 taxpayers, according to coalition calculations.

The proposal of the three councils contemplates that what is paid for the tax on large fortunes is deducted from the wealth tax. The Basque tax will begin to be applied from 3.2 million, compared to three in the rest of the country, and the maximum rate, from 16 million, compared to 10.7 million for the national one, hence the criticism of Bildu. The process for its approval has just begun with the period of allegations and then it must be endorsed in the General Meetings of each territory, the litmus test. To Bildu's refusal is added that of Podemos. “The tax on large fortunes was intended to avoid competition between autonomous communities, against the tax dumping of communities such as Madrid, Murcia or Andalusia, but this movement of the regional governments turns Euskadi into the new tax haven of the State,” criticized David Soto, purple parliamentarian.

Personal income tax deflation

For its part, the Basque Finance Council, in which the three provincial councils, the Basque Government and Eudel, the association of Basque municipalities, sit, agreed yesterday to a deflation of 2.5% in personal income tax for next year.. It will mean a collection of 100 million less and the measure is added to the adjustments applied in recent years to alleviate the consequences of inflation, with a global percentage of 7.5%. And as happens with the tax on the rich, the measure must also be endorsed in the General Meetings, either through the budget project or in a fiscal rule..

The regional Executive and the councils also updated the forecasts for the end of the year and those for next year.. Basque institutions expect to raise 18.1 billion in 2023, 5.7% more than last year. In 2024, if the calculations are met, it would be 19,000 million. This is the figure with which administrations will now begin to prepare their budgets.