The socialist barons had been suffering in silence for a week gale generated by the PP eliminating the wealth tax or reducing it in the communities where it governs. Moncloa’s response was to embrace the theses of United We Can and, in full negotiation within the Government of the Budget project, the easy speech of creating a new tax on “great fortunes” was signed up. The distinction between what the socialist ministers said and what Vice President Yolanda Díaz proclaimed demanding that the rich be the ones to bear the cost of this crisis has been null, to the bewilderment of those who are going to fight on behalf of the PSOE in the municipal electoral contest and autonomous in the month of May.
The President of the Valencian Generalitat, Ximo Puig, found this Tuesday a way to respond to the PP without confronting Moncloa. He proposed a set of measures to discount the personal income tax that Valencian taxpayers pay for the 10% inflation they suffer due to the war in Ukraine. Technically, this means deflate income tax on the middle classes, either by raising the exempt minimum or by reducing the rate for low and medium incomes. Puig’s movement increases this unpleasant sensation of a fiscal auction, but it has the virtue of correcting a mistake by Sánchez by focus on the middle classes, which are the ones that effectively bear a higher tax burden as a result of high inflation. They were also addressed by the proposal to Moreno Bonilla because, in fact, those who pay the wealth tax or the future of great fortunes are those who cannot hide their wealth either in the shadow economy or in tax havens.
Sánchez now has the opportunity to rectify. And resume the project of a real tax reform that ends this uncomfortable auction. In this context, its position on the wealth tax that is levied for the third or fourth time on the income of the middle classes that cannot hide it in shell companies should be reconsidered. The successive payment of the tax year after year added to inflation can provoke in the middle classes an effect of dilution of the patrimony far removed from the purposes of a progressive system such as the one enshrined in the Constitution. Inflation is causing an increase in revenue from public finances. That is why the PP communities can eliminate the wealth tax without excessively endangering public services. And that is why Puig can deflate personal income tax. Instead of auctioning off these surpluses, would it not be the mission of the Government of Spain to convene autonomous communities and political parties to agree on a serious tax reform that puts an end to the half-truths of the wealth tax, that fights against the submerged economy, that incorporates the commitments of Spain in multilateral forums and that care about the middle classes without generating grievances between territories? That would be the move that Sánchez could make now instead of flirting with being United We Can and disconcerting his regional presidents and their voters.
The situation is serious enough for neither Sánchez, nor Moreno Bonilla nor Puig to generate more uncertainty in the midst of the war in Ukraine, the effects of which spread virally to all corners of Spain and Europe. Everything is already invented. There is no wealth tax there and personal income tax has been deflated in most countries. Well that.