Spain mulls temporary tax on richest 1% amid war in Ukraine

Baku, September 22, AZERTAC

The Spanish government is considering levying a temporary tax on the richest 1% of Spanish residents to bolster the state’s social security net, the treasury minister said on Thursday, according to Anadolu Agency.

“We are exploring different alternatives so that the burden of the war in Ukraine doesn’t fall entirely on those who usually pay the price - the working and middle classes. Instead, it should be supported by contributions from energy companies, banks as well as the great fortunes of this country,” Maria Jesus Montero told Spanish broadcaster La Sexta.

The Spanish government has already passed windfall taxes for banks and energy companies, which will take effect on Jan.1.

While the details of Spain’s extraordinary wealth tax are still undecided, Montero said she hoped the new fiscal policy would take effect “as soon as possible.”

Like the taxes on the banks and energy companies, the government says this tax would be temporary.

“We believe that it will be important to support those suffering from high inflation for the next two years. But it will depend a lot on the course of the war in Ukraine,” she explained.

Montero said the money raised would be used to finance measures that Spain has already passed to ease inflation, such as free public transport, stipends for students to stay in school and subsidized gasoline.

In August, Spain’s annual inflation rate hit 10.5%, 1.4 percentage points higher than the eurozone average.

Although the new legislation is not ready to present to Spanish parliament, Montero revealed the plan as regional governments controlled by the conservative Popular Party move in the other direction.

Spain is already one of the few European countries with a wealth tax, but the regional governments in Madrid, Andalusia and Murcia have either eliminated the wealth tax or have recently said they are studying the move.

“It would make no sense for the government of Spain to lower taxes for the rich while asking for €140 billion ($138 billion) from the EU, which is what we are doing. Likewise, it makes no sense for regions to ask Spain for money to support education and healthcare when they’re lowering taxes for the 0.2% richest population,” the Socialist minister explained.

While the details of the new wealth tax are not fully determined, Montero said that it will not affect at least 99% of Spain’s population.

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