Questions and answers about the new tax on large fortunes

“Temporary, two years, to the millionaires and from January”. These are the four keys that are known about the new wealth tax that the Ministry of Finance is working on in a hurry. It was not in the plans to run so much, but the announcements of several regional presidents of the PP this week about the elimination of the Wealth Tax in their regions has opened the debate. The fiscal battle once again becomes the main electoral trick of the PSOE and the PP. Without more information about it, “we must let the technicians work and when we have something, we will inform them,” insisted María Jesús Montero this Thursday. These are some of the questions and answers raised by the debate. From how much is considered large fortunes? The figure is not specified, but there will be very few taxpayers, says the Government. The Minister of Finance speaks of “millionaires, from the richest 1%”, although they may be even less. Mega-millionaires, as far as we know from the Wealth Tax figures, there are 724 people in our country. Ten years ago they were half. Since 2003 they have multiplied by eleven. Leading the ranking would be the owner and founder of Inditex, Amancio Ortega with a fortune valued at 55,000 million euros, according to Forbes. In total, about 218,000 people declare in the Wealth Tax (data to 2020). As in everything, not everyone is the same millionaire. If we open up a bit more and include those in the second tier behind the mega-rich, the total number of taxpayers could rise to 8,400. What is the difference between the tax on large fortunes and the wealth tax? The former does not yet exist and will have to be designed and approved in Congress. The second was rescued in 2011 (the socialist José Luis Rodríguez Zapatero sent it to the ‘rest’ box in 2008). The big difference between the two will be who can touch it. The technical flaw that the experts of the current Wealth Tax point out the most is that the autonomous communities can decide to discount it, as Madrid already does: it gives up almost 1,000 million a year. That creates a downward competition in which communities steal taxpayers. It is an uneven race because not all regions can give up this income. Andalusia announced this week that it was going to imitate Madrid and Murcia is considering it. All three are governed by the PP. The tax on large fortunes is supposed to prevent regional governments from deciding to reduce the bill for the richest and will eliminate this downward competition. There are many more details to know that will surely mark more different. For example: which administration keeps the collection? Is it shared with the Autonomous Communities like other taxes? Tax on large fortunes: which countries have it implemented In France there is a Tax on Real Estate Fortune. In Italy, a percentage of the value of goods and properties abroad is taxed. Luxembourg maintains a “Fortune Tax”. In the Netherlands there is a “Wealth Tax” on savings, property and investments. How much could it collect? The only reference we have is what the current Wealth Tax generates: about 1,200 million euros a year. It represents 0.2% of all income. It could be 2,200 million if Madrid will not discount this tribute. And in the best of cases, if the leaks of the tax were closed a little, it could represent 0.5% of the total collection, according to calculations by Alejandro Esteller, professor of Economics at the University of Barcelona. The PSOE rejected the proposal for this specific and new tax before the summer because it wanted to address the issue in the tax reform as a whole. But these changes have not come to an end, despite already having an expert report on the matter, and the political battle unleashed by the Popular Party has forced the Government to fight back.