The Community of Madrid repeats itself, for the fifth consecutive year, as the most competitive region at the tax level, while Catalonia remains at the bottom of the Autonomous Index of Fiscal Competitiveness (IACF), a ranking prepared by the Fiscal Foundation and the Fundación Avance de la Liberté.
The capital region tops the ranking with 7.24 points out of 10, but according to the report, it deteriorates by 0.09 points. After Madrid, it is the provincial councils of Vizcaya, which recover the position lost in 2023, compared to Alava, which falls due to the temporary income tax reform. Behind them are Andalusia, Extremadura and La Rioja at the top of the list.
At the bottom, the five least fiscally competitive territories are Catalonia, which occupies the last position, since it has “twice as many regional taxes as the other Communities”, explained the director of the index, Cristina Enache.
The expert recalled that, even if the increase in wealth tax approved in 2022 has not been extended until 2024, “Catalonia’s score is not improving.”
On the other hand, in 18th place on the list is Asturias. The principality fell from the 17th place it occupied last year “due to the lack of significant reforms”, Enache explained. For this tax year, the large family deduction has been extended only to families with two children.
In this sense, Cristina Enache reiterated that the Principality needs “an urgent reform” of income tax and, in particular, inheritance taxes since “Asturians are, by far, those who pay the most for this tax.
The index was presented during an event in the Senate, the president of the Upper House, Pedro Rollán, congratulated the president of the Community, Isabel Díaz Ayuso, and her advisor to the Treasury, Rocío Albert, for “reducing the taxes and increased tax revenue.
In this sense, the head of the Treasury of the capital region affirmed that its “success” in terms of tax competitiveness is based on the “rigor of public accounts”. In this sense, he reaffirmed that the Madrid tax system is “stable, predictable and generates great confidence”.
Albert recalled that in the Community of Madrid, “taxes have been reduced 21 times and eight more reductions are in preparation.” The savings thus achieved were estimated at 31 billion euros, or 8,5000 euros paid per taxpayer. “Madrid does not have its own taxes and will not have any,” he said.
Regarding income tax, Albert recalled that “each time we reduced personal income tax, we collected more than 13.992 million in total.”7
Regarding improvements, since think tank They recommend that the Public Treasury of Madrid could improve its competitiveness “if it reduced the tax bracket of the first bracket of income to 8%, the same as that applied by Extremadura and La Rioja” (common state rate and regional 17.5%).
Andalusia
The case of Andalusia remains in fifth position (third if the provincial provinces are eliminated), although its score drops by 0.13 points, obtaining this year a result of 6.44 points.
From the I think thank you They argue that last year it was established that during the period of validity of the solidarity tax on large fortunes, the taxpayer could apply a bonus equal to the difference between the total amount of the tax itself and the total share of the temporary solidarity tax on large fortunes. big fortunes or the 100% bonus currently in force.
The Secretary General of the Treasury of Andalusia, Manuel Vázquez, recalled during the event the “important change” that has occurred in just five years. Andalusia went from being the least competitive region to top of the list.
Extremadura, the one that advances the most
The Fiscal Foundation and the Fundación del Avance de la Libertad made special mention to Extremadura, as the community that climbed the most positions. From fifteenth to seventh, or eight places. This jump, they explain in the report, is due to “several significant reforms introduced at the end of 2023 and which are in line with the IACF recommendations”.
Concretely, in September 2023, he repealed the tax on empty homes and large tenants which was to come into force during this financial year. At the same time, they introduced a 100% wealth tax bonus.
Regarding income, he reduced tax rates in the first two sections andn 1.5 percentage points and increased the tax rates corresponding to the next three brackets (income up to 60,000 euros) by 0.5 points.
For her part, the Minister of Finance and Public Administration of the Government of Extremadura, Elena Manzano, assured that when they came to power, “Extremadura was a real fiscal hell”.
The head of the Extremadura Treasury took the opportunity to announce more tax bonuses: “We are going to grant a 50% bonus in the regional income tax section for new residents, regardless of their age . And for those under 36, the deduction will be increased to 75%.
At the same time, Extremadura announced an increase in the inheritance deduction for groups one and two up to 50,000 euros.
