Spain reintroduces the Wealth Tax

As anticipated, the government recently approved the reintroduction of the unpopular wealth tax, which has been suspended since April 2008. This could be bad news for people with assets totalling more than 700,000EUR, excluding the value of their primary residence up to a value of 300,000EUR.

However the new legislation will please many since, in its original version, people with net assets of as little as 108,000EUR apart from a primary residence to the value of 150,000EUR, could be hit by the wealth tax.

Finance Minister, Elena Salgado, announced the reintroduction of the wealth tax shortly after it was confirmed by the cabinet. She estimated that about 1.08EUR billion could be raised from 160,000 of Spain’s wealthiest citizens, which would help the government to meet its responsibilities in areas such as health and education.

Already political pundits are predicting that the November election will result in a significant win for the centre-right Partido Popular and its leader, Mariano Rajoy, who has refused to speculate on whether he will again repeal the Wealth Tax, should his party be victorious.

Critics have criticised this new measure as mere window dressing, pointing out that Spain’s super-wealthy tend to invest their wealth in special investment funds that are taxed very lightly.

The announcement has ruffled the feathers of some key citizens. Emilio Botin, president of Banco Santander and one of Spain’s richest men, said he strongly disapproved of the tax: “I’ve said it once, and I repeat it now: I think it is a very bad idea to reintroduce it.”

However, the newly reinstated wealth tax will be welcomed by many families struggling to manage in the current difficult financial situation; with an average annual salary of 20,000EUR (Málaga province’s average is significantly lower), most Spaniards will find it difficult – if not impossible – to feel any genuine sympathy for Santander’s Sr. Botin.

Spokesman, José Blanco, confirmed the government’s determination to target the über-wealthy: “There are millions of Spaniards who would be delighted to have to pay this tax. This is a decisive moment for many Spaniards. Lots of people are looking for work. Lots of families are struggling. It is only fair to spread the burden of the crisis.”

Information courtesy of Perez Legal Group.