Spain proposes radical tax reform to target high-income earners and rental properties
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The generated funds would be used to subsidise essentials in Spain such as nappies, electricity and public transport
One of Spain’s political parties Sumar, led by Labour Minister Yolanda Díaz, has submitted a radical tax reform proposal aimed at increasing costs for high-income earners, large estates and luxury goods, while reducing taxes on essential goods and services.
While the proposal is still in the very early stages, it does seem to line up with the budget goals of the President of the Government, Pedro Sánchez, who summed up his economic priorities for the new political year in one sentence: “More public transport and less Lamborghini.”
Presented on Monday September 16, Ms Díaz’s lengthy pitch includes the introduction of an ‘environmental solidarity’ tax on luxury goods such as private planes, yachts and high-end cars. Additionally, the party plans to tax “excessive margins” on food prices to reduce the cost of basic necessities.
Taxes on inheritances over 1 million euros and on capital income would also be increased, while VAT on essential goods and services, like hairdressers, veterinarians, nappies and electricity, would drop.
On the other hand, VAT on private education and healthcare would be raised, since the Minister feels they are paid for “mostly from high incomes”.
Increased tax on tourist apartments
Perhaps the most controversial of the measures, Sumar has suggested increasing the tax rate on tourist rentals to 21% and eliminating certain deductions landlords currently enjoy, with the aim of making holiday accommodation “drastically” less profitable for second home owners.
Furthermore, the party plans to implement a public social leasing program for electric vehicles and reduce domestic flights of less than two and a half hours with alternative train options.
Ms Díaz wants to implement more restrictions and regulations in response to “the massive arrival of mega-cruise ships to ports to combat pollution, the saturation of public services and guarantee the right to the city.”
Finally, the proposal includes raising the tax rate on traditional tobacco and expanding it for new types of tobacco, as well as a special tax on kerosene.
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