In its first plenary session, the Council chaired by Carlos Mazón abolished the inheritance and donation tax in the Valencian Community. Also on the agenda is the abolition of the property transfer tax for the purchase of homes, an announcement in the PPCV electoral campaign that is likely to materialize in the next political course. The now president warned that the wealth tax would be subsidized at 100%.
However, this expansive tax reform by the Consell clashes with some recent recommendations and places the Community in a complex position. This is observed by the Foundation for Applied Economics Studies (Fedea), which has asked the autonomies to "calibrate" the impact of their expansionary decisions in fiscal matters.
"The autonomous communities must be aware that embarking on significant tax reductions and/or spending projects of dubious social profitability would clearly damage the sustainability of regional public finances", explain the authors Manuel Díaz, Carmen Marín and Diego Martínez in the recently published study “Estimation of future interest expenditure on the public debt of the Autonomous Communities”.
In the report published a few weeks ago, they echo the increase in the financial cost of the public debt contracted by the autonomies, with the Comunitat being the second in the ranking of territories in which the financial cost will grow the most in the coming years. Fedea estimates a payment of 985 million euros between 2022 and 2026: in 2023 the cost of the debt is 476 million, in 2024 it will stand at 679 million, in 2025 at 970 and in 2026 at 1,346 million.
After the analysis, the authors make a reflection in which the conclusion sentence, "Winter is coming" -known from the television Game of Thrones, where it was used as a metaphor for the coming complications- draws attention to warn that "time keep it up".
They state that in the coming years all governments will face “less lax” budget restrictions and warn that “more intense budget consolidation efforts will be necessary to reduce our relative indebtedness”. But in his opinion, the solution to face a more expensive public debt does not involve cutting taxes, but rather "a medium-term fiscal strategy that guarantees the sustainability of public accounts."
Among the criticisms of the abolition of taxes is that of the PSPV, whose deputy spokesman in Les Corts, Arcadi España, assured a few days ago that the abolition of the inheritance tax is a "socially unfair" fact that "compromises the economic viability of the services public”. Spain quantifies the importance of its own and assigned tax revenues managed by the Generalitat at 13% and defends that "it is evident that the reform has a negative impact on essential public services and moves away from the constitutional mandate of fiscal progressivity".
For his part, Joan Baldoví, Ombudsman for Compromís, was clearer in explaining that "if the Generalitat pays less, we are left with fewer doctors, fewer nurses and fewer teachers." The Valencian formation criticized the suppression of this tax: "The remaining 99% will have to assume it in the form of a cut."
