The autonomous communities barely collect 2% for their own taxes

The autonomous communities barely collect 2% for their own taxes

The tax on large fortunes, one of the star measures of the coalition government -which has been appealed by some autonomous communities-, could go against the regulatory legality that is granted to regional governments, which confirms "the failure of continue with a financing system that dates from 2009" and to which only "patches" have been made since then. This is recognized by Valentín Pich, president of the General Council of Economists, who believes that Spain "swims against the current" in the taxation of wealth within the European Union by creating a tax on the rich -even if it is temporary-, which will only "cover the holes that some communities open in the taxation of Patrimony». Pich bases these statements on the study "Panorama of Autonomous and Provincial Taxation 2023", which breaks down the scope of this new tax, of which he doubts its processing as it was done in a "rush that has not helped in its design".

Thus, the approval of this new tax occurs at a time when the Wealth Tax in four communities (Aragon, Catalonia, Extremadura and the Valencian Community) already had lower exempt minimums than the state one, while the Region of Murcia has increased considerably and in Andalusia and Madrid this tax is not paid as it is subsidized at 100%, and Galicia already subsidizes it at 50%. With temporary validity, Catalonia and the Valencian Community have raised the maximum marginal rate, as has Navarra. Therefore, taxpayers with assets greater than 3.7 million will have to pay the State what they saved in their communities.

Regarding the Inheritance and Gift Tax (ISD), for some time there has been a downward tax competition when the taxpayers are close relatives of the deceased or the donor, using for this purpose, in most cases, the regulation of bonuses or of significant reductions. Among all the regions, Madrid stands out, which has also extended the bonus to brothers, uncles and nephews, as has the Canary Islands.

In Inheritance there are ten communities that regulate the same types of tax as those of the state rate (7.65% to 34%). In the majority, it is practically not paid when the successors are close relatives –in the Basque Country and in six Common Regime Communities–, in the rest it is practically not paid when each heir does not have a base greater than a certain amount that, At the very least, it is €300,000 euros. In the Canary Islands and Madrid, taxation is also reduced for family members in group III. In Donations, close relatives from the Basque Country and five common regime communities are practically not taxed. In all communities, the ISD improves the tax benefits that the state norm regulates for the transmission of the family business.

Conversely, in the modalities of Onerous Patrimonial Transfers (TPO) or Documented Legal Acts, the economists conclude that, in general, an attempt has been made to mitigate the drop in collection, due to the loss of vigor of the real estate sector, with an increase of the tax rates. Many communities apply reduced rates when in the TPO of real estate transfers when the VAT exemption is not waived and, nevertheless, they penalize transfers with waiver of the VAT exemption, raising the rates in the Documented Legal Acts modality.

One of the aspects that economists and tax advisers criticize the most is the regulation of ceded taxes, for being "labyrinthine" and, for this reason, they ask the communities that have not yet published consolidated texts to do so for "greater legal certainty for the citizens”. They refer to the fact that "the use of the regulatory capacity of the communities in ceded taxes has produced 958 regulatory impacts, of which 317 correspond to personal income tax, especially deductions, although these only reported savings to taxpayers in 2020 of 498 million euros, 0.47% of the total revenue”. That is, they have "very little impact on collection." A complex fiscal dynamic of the autonomies, which the economists in the report criticize because it has led to the creation of 56 taxes from all the communities except Madrid, which has repealed the few it had, plus four from the Valencian Community that have not entered into vigor. Catalonia takes the cake as it is the region with the highest number of its own taxes. But they all obtain a derisory 2% of their total collection, although this grew by 14.1% in 2021 compared to 2020. The Government estimate is that the communities will have ended 2022 – analysts have worked with provisional data – with a collection of 254,000 million euros, 15% more than the previous year and 10,000 million euros above budget.

This freedom in the application of regional regulations has led to no community having an IRPF rate "exactly the same as the state one" and that in many cases "they do not even coincide in the number of sections". Despite this, the General Council of Economists is not postulating in favor of tax harmonization, which is pursued by the Minister of Finance, María Jesús Montero, and claimed by some regional governments -mostly socialists-, because "one thing is that we are coordinated and that the rules are the same for everyone and another that we are all the same", emphasized Pich, who did question "whether it is worth going against the current in the taxation of wealth", a criticism that he extended to the rest of the new taxes " through amendments to a bill and without listening to all the affected parties» –referring to both the fortunes and the banking and energy companies.

The Taxation Panorama also points out that the tax differences were accentuated during 2022, after introducing new features in eight communities, which lowered or deflated the IRPF. Thus, Andalusia and Galicia rebated Heritage; Extremadura practically freed Donations to close relatives and, in Asset Transfers, the Balearic Islands and the Valencian Community increased the rates for large tax bases.

And by 2023, the situation does not improve, since there have been new modifications in own taxes as a result of the creation of the state tax on waste, which has meant that the communities that had a similar tax implemented have proceeded to abolish it or leave it without effect.