Isabel Díaz Ayuso, the Madrid president, and with her the PP staff have abused the benefits of being the capital so much that they have ended up giving rise to a radical and bold action by the Government of Pedro Sánchez that could lead to a loss of that advantage that they have used so much to erode interterritorial solidarity, the theoretical objective of the Spain of the autonomies. The powerful populist machine of the PP in Madrid is in question. Not definitively, of course, because as always happens in Spain, we are facing the first episode of a long battle that, once again, may end up being decided by the courts and not by politics or the vote of citizens. Incidentally, the business world looks desperately as its long-awaited goal of ending this tax in all of Spain is once again postponed.
The president of the PP, Alberto Núñez Feijóo, is raising the banner of tax cuts as a platform to ensure his next electoral victory. He has promoted and blessed the decision of the Andalusian president, Juan Manuel Moreno Bonilla, to fully discount the wealth tax in his community. He has also spurred the cascade of pronouncements in the same direction from other territorial leaders of his party. Among others, Murcia, then Galicia, which has announced a 50% discount.
It has been ratified in a public conversation with José María Aznar, former president of the Government and of his party. The mantra of lowering taxes as the only possible economic policy is permanently engraved in the ideological gene of the PP. But the economic situation heralds a storm. And it seems that no less.
Will Feijóo be able to keep his promise if he gets to govern? The Spanish economy is already among the most indebted in the eurozone, after a decade and a half of financial crisis, pandemic, inflation and shock due to the war in Ukraine. It is very likely that the eurozone is already counting the first weeks of recession. The Deutsche Bank research service has predicted this past week a fall in the economy of 2.2% for next year in the area as a whole and of no less than 4% for its leading economy, Germany. This is the latest dismal analysis, but far from the only one. These days abound.
Will Spain be able to overcome this new economic upheaval without enlarging the backpack of public debt, increasing public spending and raising taxes? Will Feijóo contrast his ideas with the leaders of his party who previously held economic positions in the government? Especially from the economic team of Mariano Rajoy, the president of the PP government between 2011 and 2018. It is Luis de Guindos, Minister of Economy and current vice president of the European Central Bank (ECB). The one that raises interest rates at full speed to tackle inflation by slowing down an economy that is already going into a tailspin. Or Cristóbal Montoro, head of the Treasury, the man with the most general state budgets behind him. The two, like their former president, had already held positions of high responsibility in the popular governments of José María Aznar (1996-2004).
The two PP executives made their debut amending, if not burying, their tax reduction slogans, aired during the electoral campaigns. Rodrigo Rato, Aznar's economic vice president, began his term with increases in various taxes. Although the most dramatic episode was undoubtedly with the start of Rajoy, who had to announce as soon as he took office, through the mouth of Montoro, a burdensome general increase in taxes, which would frame a harsh austerity plan months later, which would remain in force almost entirely during his entire mandate and that had not had a parallel in Spain since the Stabilization Plan of 1959.
And precisely, in those years of financial crisis, one of Montoro's worst nightmares was called Esperanza Aguirre, the forerunner of the line of fiscal irresponsibility and lack of solidarity of the president of the Community of Madrid. The systematic policy of this one of hers of compensating her voters for the tax increases of the Rajoy Government with reductions in personal income tax and other taxes in her territory not only politically irritated the minister. The Andalusian knew that to balance her accounts, the Madrid leader would end up in her office on Calle de Alcalá asking for more money for her community. Montoro ended up being in charge of charging more taxes to the rest of the Spanish to finance Aguirre's ascent to heaven, ultimately failed. In fact, Rajoy's economic team was the first to think about how to deactivate the fiscal populism of his colleagues in Madrid.
With just a few aesthetic changes, Ayuso has followed the line of his mentor Aguirre. The current fiscal offensive of the autonomous governments of the PP comes at a particularly delicate moment. It is understood the interest in strengthening the position in the polls and getting the image of Feijóo the winner to set in public opinion. But the dominant trend in European, if not global, politics and economics is just the opposite. This same week, the European Commission has once again reminded Spain that taxes are necessary and that the coming months are going to be very demanding for public finances. The popular Europeans are also on that ship.
María Jesús Montero, the Minister of Finance, has already advanced her proposal, a rate or tax on so-called large fortunes. The Government thinks that it benefits it to attack tax cuts that affect a very small sector of society, the richest. But she has also detected that the PP has opened a feasible political path for her to undertake her long-announced project of harmonization of the assigned taxes. With the majority of the territories renouncing these revenues, it can focus the debate on right/left terms, leaving the jurisdictional, territorial debate in the background. And she directly assumes the possible political cost, instead of her barons, who have elections just around the corner.
