What is the PSOE in Madrid playing?

The first electoral proposals of the Madrid socialists constitute improvised imitations of the policy applied until now by Isabel Díaz Ayuso.

07 January 2023 Saturday 21:39
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What is the PSOE in Madrid playing?

The first electoral proposals of the Madrid socialists constitute improvised imitations of the policy applied until now by Isabel Díaz Ayuso. They do not seem to harbor much hope in the next elections

Coinciding with the end of the year, Juan Lobato, general secretary of the Madrid PSOE and candidate for the presidency of that community in the upcoming elections this year, has formulated a tax reform proposal that he will include in his electoral program and that according to his words It will have as its central core a reduction in Income Tax (IRPF) for 95% of Madrid residents, accompanied by an increase for the remaining 5% who earn more than 100,000 euros.

The displacement of the Madrid socialist leader to the speech until now comfortably occupied by the president of the Community, Isabel Díaz Ayuso, has gone largely unnoticed. Does Lobato expect to be more credible than the popular leader in this very delicate field of fiscal policy and to which she and her party have taken such a well-taken measure? Is a program that widens the fiscal grievance of the rest of Spain with respect to Madrid consistent with the line of the Pedro Sánchez government? Does Lobato's plan reinforce the profile of a coherent opposition or does it seem like a surrender, a simple follow-on with a leftist wink (the rise to 5%) to reassure the most skeptical? Is there a hidden fiscal plan from the PSOE that Sánchez and María Jesús Montero, the party's deputy general secretary and finance minister, have not yet made public?

Lobato, in an interview with Servimedia, also referred to estate and inheritance taxes, the performance of which is ceded by the State to the Autonomous Communities and which in Madrid have a 100% discount, that is, nothing is paid. The Madrid socialist advanced (it is assumed that in the event that he wins the elections, he forms a government and changes the regional norm to repeal the exemptions) that he will contemplate exempting from his payment the "productive assets of all Madrid citizens who have money in companies that are operating, in properties that are rented or in use”. In addition, addressing those who have the money "in tax havens, in 'offshore' accounts and who are not producing economic activity or employment in Madrid", he said that he would give them the alternative of exempting them from this taxation if they bring their accounts to "generate employment and economic activity. A truly surprising tax reform.

The Madrid socialists have been baffled for decades, especially after Díaz Ayuso's latest victory. And it does not seem that proposals such as those advanced by Lobato are going to get them out of that state.

It is difficult to choose where to start. It turns out that to prevent the wealthiest in the country, mostly based in the capital of Spain, from being exempt from wealth tax (a differential fact that does not occur in most of the other communities), the State Government, headed by the leader of his party, has approved a so-called "solidarity tax on large fortunes", of a temporary nature, yes (pending the next general elections at the end of this year and the resulting majorities) in order to see the possibilities of putting on the table a norm of harmonization of those taxes ceded to the communities.

The fiscal anomaly in Madrid, the fact that the richest community applies the most benevolent fiscal regime in the entire country, a reality that is aggravated by economic and health crises and with each electoral campaign, thus radically breaking with the principle of progressivity, has generated harsh criticism from many regional presidents. Above all due to the transfer of the owners of large assets to the capital, reducing their collection without increasing that of the State.

In addition, Lobato falls short of promising something similar to a regional tax amnesty, by announcing tax reductions on wealth sheltered "in tax havens or in offshore accounts", since it so happens that these capitals should already be declared to the ranch; otherwise, they are opaque. And the tax amnesty, in addition to being questioned by the Supreme Court itself, is clearly beyond the reach of any autonomous community. The 1996 law that regulates the assignment of State taxes to the autonomous communities, establishes that their regulatory powers in terms of wealth tax are limited to setting the minimum exemption and the rate. Final point; Lobato's ambitions are off script.

However, the star proposal, that of lowering personal income tax for 95% of taxpayers, is also of doubtful credibility. In order for this to be possible and for the beneficiaries to notice it, if it is intended to maintain the volume of income from the community in this tax at the same time, an increase should be applied to the remaining 5% which, technical considerations aside, would be politically explosive. Let us remember once again that the central government has already approved its own and that there are limits to the maximum that a taxpayer can pay by adding income and assets, a rule that is beyond regional control.

Lobato's proposal runs the risk of fanning the specter of tax confiscation without really offering any realistic alternative. It seems more the result of confusion in the face of a harsh electoral horizon in which very little hope is already placed. Between the pressure of Mas Madrid, headed by Mónica García, who would consolidate herself as the second force in the community's parliament (which she unexpectedly won in the last 2021 elections) and the certain victory of Díaz Ayuso, the Madrid socialists are looking for a their own profile, but it is costing them. At the moment, the first ideas are more reminiscent of a light version of the prevailing Ayusismo rather than an alternative designed to solve the problems of the citizens of Madrid and mend the battered relations of the Community of the capital with those of the rest of the country.



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