Last week some big debates were created after several regional Peoples' Party governments announced that they would lower taxes and offer new tax incentives and exemptions for their citizens. The announcements were interpreted as a rebellion against Cristóbal Montoro's stiff tax policy.
In Madrid's case, a two-sided debate arose between regional government members and Minister Montoro and dissipated the same way that it started. The squabble arose when Madrid announced that it was going to lower its personal income tax by a percentage point (regions get half of their tax revenues from this tax), something that the Madrid government was pressured to deny.
But the tax cuts will be slight and hardly have any real effect on taxpayers.
A one-point tax cut across the board would create a savings of just 14.8% on average for each taxpayer. If all the regional governments agree to the cuts, they would only rake in an additional 255.5 million of the 35.5 billion that they earn in through personal income taxation each year.
The tax announcements don't achieve much and are certainly part of the regions' campaign strategy as they prepare for 2015 elections. The politicians in office now do not want to take responsibility for the natinoal financial crisis and are doing what they can to distance themselves from its causes and effects.
Increased credibility would open a serious discussion of how the regional governments can build a new financing model, eliminate duplicate government jobs and develop competencies.