Spain Approves 'Solidarity' Tax to Make Nation's Top 0.1% Pay a Fairer Share

Spain's leftist coalition government on Thursday announced a series of downwardly redistributive fiscal reforms—including a temporary "solidarity" tax on the nation's 23,000 wealthiest residents—that lawmakers hope will ease the cost-of-living crisis hurting millions of working people.

In 2023 and 2024, the 0.1% of Spanish taxpayers who own more than €3 million ($2.9 million) in assets will be subject to a new wealth tax.

According to The Associated Press: "People with holdings of €3 million to €5 million ($2.9 million to $4.9 million) will be taxed 1.7% and those whose personal worth is €5 million to €10 million ($4.9 million to $9.8 million) will be taxed at 2.1%. Individuals with fortunes above €10 million will pay 3.5%."

This levy on 1 out of every 1,000 citizens, which Finance Minister María Jesús Montero described as a "solidarity" tax, is one of many changes to Spain's upcoming budget that are intended to mitigate economic hardship as the prices of energy, food, and other essential goods continue to soar due to corporate profiteering and the destabilizing effects of the Covid-19 pandemic, the war in Ukraine, and the climate crisis on global supply chains.

As AP reported: "The government also plans to increase the income tax rate from 26% to 27% for people earning more than €200,000 ($196,000). The capital gains tax for incomes above €300,000 ($294,000) will go up to 28%, an increase of two percentage points."

These measures—agreed upon by the Spanish Socialist Workers' Party and its junior coalition partner, Unidas Podemos—are expected to raise €3.14 billion ($3.08 billion) over the next two years. The government plans to use this revenue to fund programs that are designed to assist those with modest incomes.

In addition to hiking taxes on its richest citizens, Spain is also poised to offer working people and small businesses more relief by trimming the levies they owe by an estimated €1.9 billion.

"The government plans to reduce the income tax on annual wages of up to €21,000 ($20,584)," AP noted. "Montero said this will benefit some 50% of the workforce given that the average annual salary in Spain is €21,000."

Moreover, the government agreed to slash the sales tax on feminine hygiene products and contraceptives from 10% to 4%.

"We have to make this adjustment at this time to combat the effects of inflation," Montero told reporters. Although the country's inflation rate fell from 10.5% in August to 9% in September as energy prices declined, it remains high.

"There is the need to ask for a greater effort from those who are benefiting from energy prices and interest rates," she added, referring to taxes on utilities and banks that are being prepared.

These changes to Spain's tax code, said Montero, are bound to make it "more progressive, efficient, fair, and also enough to guarantee social justice and economic efficiency."