The Treasury collects only 40% of what is expected from the tax on large fortunes and 90% of the income comes from Madrid

The Solidarity Tax of the Great Fortunes has hit a major blow in its collection. The Tax Agency has received only 623 million euros for this tax, barely 40% of the 1,500 million it expected to obtain when it presented this tax in September of last year.. And almost 90% of the income obtained comes from the Community of Madrid.

The figures contrast with the good results achieved by special taxes on banks and energy companies, approved in the same package. The collection for these two taxes in the first payment period amounted to 1,454 million, a figure that led the Minister of Finance, María Jesús Montero, to anticipate income of more than 3,000 million euros at the end of the year, in line with what is foreseen by the Executive.

The new tax on large fortunes was designed as a carbon copy of the Wealth Tax—which taxes the wealth of the wealthiest taxpayers in the country—but with the idea that, in practice, it would only be applied in communities that benefit from this tax. tribute. Since the income obtained from the “solidarity tax” goes entirely to the State's coffers, the Executive thus intended to counteract the tax bonuses approved by the autonomies in the hands of the PP.

This explains that 89% of the revenue obtained with the new tax comes from the great wealth of Madrid, the community with the greatest concentration of fortunes and the only one—along with Andalusia—that provided a 100% discount on the wealth tax in 2022. A total bonus that means that, in practice, no one pays this tax in those two territories.

Finally, there have been 12,010 taxpayers who have paid the “solidarity tax”, with an average fee of 52,000 euros per taxpayer, says the Ministry of Finance. Figures very far from the objectives set by the Treasury, which placed potential filers at 23,000.. Of the total number of filers, 10,302 resided in the Community of Madrid, from where 555 million euros have been collected. Then comes Andalusia, with income obtained of just 29.7 million euros through 865 taxpayers, and Galicia – which subsidizes the wealth tax by 50% – with 9.8 million in revenue contributed by 91 taxpayers.

In addition, another 26.2 million have been obtained, mainly from filers residing abroad. In the rest of the territory, the tax collection has been residual. In Catalonia only 2 million euros have been raised, while in Cantabria, Asturias and the Valencian Community the income obtained does not even reach one million. In fact, not a single euro has been collected in up to eight autonomous communities.. These are Aragon, the Balearic Islands, the Canary Islands, Castilla-La Mancha, Castilla y León, Extremadura, Murcia and La Rioja.

The Government defends that the tax “meets the objective set by the Government of advancing a more progressive fiscal policy” and points out that the joint collection together with the wealth tax rises to 1,868 million in 2023. Minister Montero herself has described the data as “good” and the Treasury considers that the figures are “consistent” with the Executive's forecasts, which spoke of income of 1.5 billion.

The Government has clarified on several occasions that this forecast would be fulfilled only if all the autonomies subsidized the wealth tax at 100%, something that currently only occurs in Madrid and Andalusia (although Murcia, Cantabria, and the Valencian Community have expressed their intention to delete it). However, those 1.5 billion in collection was the figure that the Executive sent to Brussels in the Budget Plan in which it details the tax revenues it expected to obtain.

Tax collection puncture

The collection of the Solidarity tax on Large Fortunes has been very weak due to an error in its design that the Government was unable to correct in time due to the speed with which the tax was carried out.. This is a technical issue that, in practice, has meant that taxpayers have ultimately paid up to 80% less than what they would have been entitled to.

The crux of the matter is in the so-called “fiscal shield”, a regulation that prevents the joint contributions of personal income tax, assets and solidarity of large fortunes from exceeding 60% of the income tax base.. That is, taxpayers should not pay more than 60% of the income they obtain for these three taxes.

The law by which the new tax was established indicates that when the full quota of these three taxes exceeds 60%, taxpayers could reduce the quota to be paid by up to 80% for large fortunes.. By talking about a “full fee” and not a “reduced fee”, thousands of Madrid taxpayers have been able to benefit from the tax shield, even though they have not paid a single euro for the wealth tax. The reason is that the full fee reflects the payment that would correspond to taxpayers if the tax were not 100% subsidized, while the reduced fee does take that rebate into account.

The Treasury tried to correct this error through the back door in the ministerial order that approved the model for collecting the tax, but the Council of State issued a harsh ruling reprimanding the department of María Jesús Montero. In the text, advanced by Vozpópuli, the Treasury was accused of “contravening, in a clear way and through a totally inappropriate channel” the law. Finally, the original wording of the law was maintained, which led organizations such as Airef to warn that the final collection that would be obtained would be much lower than the 1.5 billion that the Executive predicted.. The tax authority estimated the income at about 635 million, a figure practically identical to what was known this Wednesday.

Appealed to the Constitutional Court

The Solidarity Tax on Large Fortunes is currently being appealed before the Constitutional Court (TC) by the regional governments of Madrid, Andalusia and Murcia. The TC is studying the issue, although it has already refused to provisionally suspend the deployment of the tax. The latest judicial movement that affects this figure was carried out this Wednesday by the Community of Madrid, which has also appealed the tax settlement model. In the event that the TC decides to annul the tax, the Treasury must return what was collected to the taxpayers, but this process could take years until the highest interpreter of the Constitution resolves the issue.