The PNV remains in doubt about whether it will execute the 'tax on the rich'

The execution or not of the so-called tax on large fortunes in Basque territory remains unknown.

Thomas Osborne
Thomas Osborne
07 January 2023 Saturday 01:33
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The PNV remains in doubt about whether it will execute the 'tax on the rich'

The execution or not of the so-called tax on large fortunes in Basque territory remains unknown. The Ministry of Finance and Public Function agreed on December 27 to negotiate this tax with the Basque councils. The foral institutions acquired, consequently, not only the collection capacity on this new tax, but also the regulations and, in principle, they should promote a legal change to introduce it in the foral sphere. The PNV, however, remains in doubt as to whether it will execute it as a complementary wealth tax or if, on the contrary, it will choose not to activate it, which would generate considerable political trouble and fuel positions contrary to the Basque tax system.

The lehendakari, Iñigo Urkullu, pointed out at first that this new tax "is designed in Madrid for communities that do not have a wealth tax", although he defended that, based on the economic agreement, it should be agreed with the councils. The level of agreement so far was very broad, and the pact with the Ministry has already been settled. The discord is born from there.

The regulatory implementation of the new tax as complementary to wealth requires a political agreement in the councils of Bizkaia, Gipuzkoa and Álava, which logically is that it came from the hand of the PNV and PSE, which govern together in the foral institutions. The position in the jeltzal ranks, however, has not yet been decided and the option of not activating it remains alive, alluding to the fact that heritage already exists.

From a purely political reading, in the PNV they glimpse the schism that would generate annulment of the temporary solidarity tax of great fortunes. For this reason, many voices are in favor of making it complementary with patrimony and avoiding a political mess in the middle of the electoral horizon. The path of non-activation of the tax, not in vain, would make a dent in the PNV and PSE coalition, which also governs the Basque Government and the main municipalities.

That option, moreover, is presumed extremely unpopular. The same sources that defend its reconciliation with wealth, in order to settle the issue, perceive that Basque society would not understand that a tax on large fortunes should be annulled, a tax known by the expressive name of tax on the rich, no matter how hard you try to explain its similarity with patrimony.

The third derivative would arrive in the key of national politics. It is evident that the non-application of this tax would cause a mess with respect to other communities and would amplify the critical voices with the economic agreement, especially from Madrid and Andalusia, the communities that have brought the new tribute to great fortunes to the Constitutional they see it as an offensive against their decision to suppress assets, to which Murcia had joined.

Allusions to the fact that the Basque Country would become a kind of fiscal island for great fortunes are taken for granted. Another thing is that it really was like that. The sources consulted do not foresee the possibility that it could lead to a transfer of great fortunes to the Basque Country, something that has been perceived in the opposite direction and looking at Madrid. Basically, the experts allude to the fact that the current wealth tax rates in the foral territories are very similar to those of the new temporary tax.

At this point, however, there is a nuance: the rates do differ, and are higher in the case of the new tax, for those taxpayers with assets with a net value of more than 10 million euros. It would be about 500 people. Are the doubts of a part of the PNV based on an interest in seducing these great fortunes? From the Urkullu Cabinet they indicated that they would not enter into the struggle to "fish for rich people" and have always defended maintaining heritage. The truth is that there are other factors to take into account.

The first is technical in nature: activating the tax on large fortunes in 2022, with the fiscal year closed, would require Basque treasuries to apply retroactively with uncertain legal consequences. Some voices also indicate that the application of the new tax, even in 2023, would devalue Basque fiscal autonomy. The debate is served and it is still not clear if the PNV will overcome this mess.