Junts and the PP declare war on the "fiscal hell" of Salvador Illa and Pedro Sánchez

BarcelonaFiscal hell is a concept that has been gaining ground on the right of parliamentary arcs. It was popularized by the president of Foment del Treball, Josep Sánchez Llibre, and has now been adopted as their own by parties ranging from the PP to Junts, including the far-right Vox and Aliança Catalana. It doesn't take much imagination to conclude that it is a frontal criticism of the current tax model in both Catalonia and the State. Now it is the turn of Carles Puigdemont's party, which in this week's plenary session in the Parlament has obsessively proposed to attack the taxation maintained by the Generalitat with a double initiative: to deflate personal income tax (IRPF) (to eliminate inflation from the Government's revenue) and to subsidize the inheritance and gift tax. Junts knows it will lose the vote (it will probably only have the PP, Vox, and Aliança on its side), but it intends for it to be the start of a cultural battle against the left.

The national spokesperson, Josep Rius, was already talking on Monday about this "fiscal hell", which Junts also did not reverse during its years in the Govern. The Junts supporters also take advantage of the fact that in Andalusia the president of the Junta, Juanma Moreno, has announced a battery of tax cuts to contrast the models, but also to denounce that the Andalusians are doing so while Catalonia maintains a fiscal deficit of 21 billion euros annually, which leaves it with less room for maneuver.

Behind the slogan "Less taxes and more justice" lies a cultural war, which has the inheritance tax as one of the main battlegrounds, called "the death tax" by some on the right. A week ago, the president of the PP, Alberto Núñez Feijóo, resorted precisely to this definition regarding inheritances and used the term fiscal hell to contrast his model with that of Pedro Sánchez. In line with what Mariano Rajoy once promised – although he would later end up raising taxes to face the economic crisis –, Feijóo says he will lower personal income tax and housing taxes, renounce inheritance tax, and approve a battery of tax cuts if he governs.

Junqueras has also proposed to Congress the elimination of the wealth tax, which, along with inheritance tax and regional income tax brackets, allows autonomies the most regulatory capacity. In areas governed by the PP, in fact, they have practically eliminated them, despite the strong opposition from the left, which argues that they are progressive taxes that tax wealth and allow for a fairer redistribution of resources. The Catalan and Spanish executives argue that by renouncing this revenue, public services would have to be cut. The new Minister of Finance, Arcadi España, regrets that Junts and the PP "delegitimize taxes, as if they were bad and served no purpose." In an interview with SER, the minister recalled that it is thanks to taxes that public services can be financed: "Where do the 90,000 euros for a transplant, the 3,700 for a night in the ICU, or the salaries of police officers, teachers, and nurses come from?"

Within Junts, the party's left-wing sector has also been reluctant to abolish some taxes like the wealth tax, despite having endorsed the proposal that will be put to a vote this Wednesday. In the tax field, however, it is the party's vice-president and a key figure in the liberal sector, Antoni Castellà, who is steering matters in the Catalan chamber. He is one of those responsible for the party increasingly marking a clear ideological profile, with a convergent approach.with a convergent approach.

The tax cut

What Junts proposes with the deflation of personal income tax (IRPF) is the adjustment of tax brackets and deductions to adapt tax collection to inflation and ensure that Catalans do not pay more taxes in relative terms. This means moving all tax brackets, something the Catalan government has ruled out. However, the Catalan executive did approve a one-point reduction in personal income tax for the lowest incomes of €33,000 per year, a measure similar to one already promoted by the executive of Pere Aragonès. This has resulted in a reduction in tax collection in this bracket of 65 million euros, according to the Minister of Economy and Finance, Alícia Romero.

The PP has also joined the fiscal war this week, intensifying its campaign for income tax returns, with the slogan "You pay more and receive less," criticizing the 15 specific taxes Catalonia has and denouncing that Catalans are the ones who pay the most in the brackets up to €30,000 per year of income. But this battle by the Popular Party has received a response from the Spanish government, which recalls the state-level reductions in VAT and personal income tax for low incomes, while the Rajoy executive promoted "historic" increases.

Vox has stated that it supports the tax reduction proposed by Junts, although it considers it "insufficient," according to spokesperson Joan Garriga. The Spanish far-right wants there to be only two regional personal income tax brackets, one at 15% for incomes up to €70,000 and another at 25% for higher incomes – there are currently eight progressive brackets.

Regarding inheritance tax, the "Junts" supporters argue that taxes related to assets that include inheritances "have already been paid during life." They now propose to grant a 99% bonus – meaning, practically eliminate it, as in the PP-governed regions – following the example of the first government of Artur Mas, which in 2010 agreed with the PP on a significant reduction of the tax, although two years later it would be increased again with ERC. During the pandemic, moreover, the government of Quim Torra (Junts in coalition with ERC) also made upward adjustments to inheritance tax and increased personal income tax in the higher brackets – and reduced it in the lower ones – after a budget agreement with Comuns. In inheritance and donation taxes, Catalonia collected 1,162 million euros last year and in wealth tax, it collected 835 million euros.