Prime minister pledges to abolish wealth tax

5 December 2007

MADRID – Prime Minister José Luis Rodríguez Zapatero pledged Tuesday to eliminate Spain’s wealth tax if re-elected in next year’s general election, arguing that budget surpluses have created room for further tax cuts.

"One of the first decisions we would take at the beginning of the next legislature would be the elimination of the wealth tax," Zapatero told a business conference in Madrid. "During this legislature several moderate tax reductions have been carried out… and my view is that there is still room to lower them further."

The wealth tax is levied by Spain’s regional governments on residents’ total assets – from homes to money in bank accounts – and brings in around EUR 1.4 billion a year, a relatively small amount. However, Zapatero noted that it is a tax paid mostly by the middle classes because the wealthy have developed "instruments" to avoid paying it.

"The tax unfairly affects the fiscal treatment of Spaniards," the prime minister said.

Most other European countries have also eliminated wealth taxes in recent years. In Spain, it was introduced as a supposedly temporary measure under Franco in 1957 with the primary intention of forcing people to disclose their assets. It has barely been changed since then.

The announcement drew a mixed reaction from lawmakers. Spain’s main opposition Popular Party accused Zapatero of copying its ideas in the run-up to the election after it proposed similar measures in the summer. The Communist-led United Left, however, demanded that the tax be maintained, arguing that it is "scandalous" to reduce taxes on the wealthy.

Subject: Spanish news