The Spanish government is reinstating the Impuesto de Patrimonio, an asset-based tax placed on a person's net worth. This is not just a desperate last-minute measure designed to mine political accomplishment from economic hard times, but a useless effort, one that will not meet its theoretical revenue objectives.
Basically, the tax cannot bring in predicted revenues of at least 1 billion, because regional governments are responsible for applying it. That is to say, upon reinstating the tax burden, they would enforce whatever tax law that they vote on, and they will likely reduce or eliminate the tax burden on citizens.
If they approve 100% exemptions, as in the case of Madrid, the latter prevails. Other regional governments could choose to target citizens other than those with more than 700,000 euros of assets (the current level set by the tax revision rule).
With this in mind, some of the Spain Commercial Collection Agencies (called CCAA in Spanish) would issue a weaker Patrimonio tax, undermining tax revenue predictions. So, as the reinstated tax brings in less revenue, the implementation will turn out expensive in relation to the earnings predictions and be a false signal from a government that stubbornly insists on making ineffectual decisions.
All this is pure electoral politics. That said, the Partido Popular presidential candidate Mariano Rajoy did announce fiscal measures that have positive economic goals for growth, such as reducing the tax burden on small and medium-sized companies. This action could help the majority of Spanish companies, who are big job creators in the country, to climb out of a tough economic situation.
