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‘Fewer Lamborghinis’: Spain’s PM aims to tax the super-rich more 

Spanish Prime Minister Pedro Sánchez has announced that his government is planning higher taxes for those "with enough money to live 100 lives", which could mean a higher income tax than the current maximum of 47 percent.

Published: 5 September 2024 12:05 CEST
'Fewer Lamborghinis': Spain's PM aims to tax the super-rich more 
For Sánchez, Spain will be a better country if there is "more public transport and fewer Lamborghinis."(Photo by Borja Puig de la BELLACASA / LA MONCLOA / AFP)

Sánchez kicked off the political year on Wednesday September 4th with a press conference in which he announced “new measures aimed at limiting the disproportionate privileges that certain elites in the country have and benefit from.”

“We are going to tax those who already have enough money in the bank to live a hundred lives,” Sánchez told journalists at the Cervantes Institute.

“We will do this, I repeat, not to harm millionaires, but to protect the middle and working classes from a system that continues to be extraordinarily unfair,” the PSOE leader said.

For Sánchez, “regardless of what some people think, Spain will be a better country if it has more electric cars, made in Spain, more public buses and, therefore, more public transport and fewer Lamborghinis.”

According to the Spanish PM, a more progressive tax system will be one of the three main axes that the left-wing coalition government will develop in economic matters in this new political year, with taxes “that will increase more for those who have more.”

The highest income tax (IRPF) bracket is currently 47 percent, for those earning above €300,000 a year. People earning between €60,000 and €299,999 have an income tax rate of 45 percent.

The Socialist-led government also introduced the so-called ‘millionaire’ or ‘solidarity’ tax in 2022, a levy on people worth more than €3 million (it’s not a tax on income but rather on assets and holdings). There is also a wealth tax which varies based on the region and the residency status.

READ ALSO: How wealthy people in Spain are avoiding the millionaire tax

Sánchez has not yet specified how much income is ‘enough to live a hundred lives’, nor if the planned measures will include higher-income earners than aren’t millionaires but have above average salaries. 

In Spain, there are 5 million people who earn above €3,673 gross a month, a figure from the French Observatory of Inequalities (relating to Spain) and cited in Forbes as being the threshold for being classified as ‘rich’ in Spain.

When Spain’s Economy Minister Carlos Cuerpo was asked on Onda Cero radio station to disclose more about what the Spanish premier was planning, he hinted the main focus will be the super-rich. 

For political opponent and far-right Vox leader Santiago Abascal, Sánchez’s aim is “destroying the middle classes” rather than having anything against “Lamborghinis” and the wealthy.

Similarly, the country’s right-wing media has been critical with the PM’s announcement, claiming that he wants to “kick the rich out of Spain” or distract from increasing poverty in the country.

People with incomes above €600,000 a year represent only 0.07 percent of the population in Spain, contributing around 7.57 percent of taxes to public coffers.

On the other hand, the middle classes – those with an income between €30,000 and €60,000 – make up around 21 percent of the population and their taxes add up to 36.8 percent of the total. 

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PROPERTY

Spain’s plan to limit temporary accommodation rejected

Spain's left-wing government had planned to tighten its grip on temporary accommodation rentals as a potential means of making more long-term rentals available, but the country's right-wing parties on Tuesday rejected the proposal in parliament.

Published: 18 September 2024 11:53 CEST
Spain's plan to limit temporary accommodation rejected

If passed, the new law would have meant that anyone who wanted to temporarily rent a property would have to explain why and provide a valid reason.

For example, students or researchers would have to show the research contract or course booking to show it would only last a few months.

It would have also meant that if more than six months passed or more than two consecutive contracts issued, it will have automatically become a long-term habitual residence instead.

On Tuesday September 17th, the proposal was ultimately rejected in the Spanish Congress, voted against by Spain’s three main right-wing parties – Catalan nationalists Junts, Spain’s main opposition party the PP and far-right Vox.

The aim in part was to try and rectify the controversial Housing Law, which came into effect in 2023.

In most people’s eyes, the legislation has failed as landlords have found several loopholes to get around the restrictions, prices have continued to increase and the stock of rental properties is even more diminished.

READ ALSO: Has Spain’s Housing Law completely failed to control rents?

As a result of the fear of heightened regulation for landlords, many have left the traditional market and turned to tourist rentals or temporary accommodation instead, which are far more lucrative. 

This has had the opposite effect, increasing rental prices instead of stabilising or decreasing them.

READ MORE: Why landlords in Spain leave their flats empty rather than rent long-term

Seasonal contracts and room rentals allow landlords to raise prices every six or nine months and they not subject to the price limitations of the housing law.

The idea of this new law was to try and set the maximum duration of a temporary rental contracts at six months in order to avoid this, but it could have potentially also caused problems for many who need this type accommodation such as students, digital nomads, those living here on a short term basis etc. 

During the debate, Sumar’s spokesperson, Íñigo Errejón, defended the law saying that it is a “solvent”, “fair” and “precise” proposal, which will help “correct an abuse” and “close the gap through which “Landlords can use to avoid the LAU (Urban Leasing Law) and rent regulation”.  

Far-left party Podemos blamed the ruling PSOE for having left this “hole” in the housing law, but also agreed that the restrictions on temporary accommodation were needed to try and rectify this.

READ ALSO: Has Spain’s Housing Law completely failed to control rents?

Junts (Catalonia’s main pro-independence party) and the PNV, the Basque nationalist party, were firmly against it. They agreed that the problem must be solved and that “accessible decent housing was needed”, but raised the situation of students, interns, residents or workers who need housing for flexible periods.

Junts party member Marta Madrenas warned of the harmful effects that this limitation on temporary rentals can have for university cities such as Girona.

Vox and the PP meanwhile argued that they don’t want to help cover up the mistakes made by the left with regards to the Housing Law.

Vox deputy Ignacio Hoces stated that the increase in seasonal rentals has occurred due to the “failure” of the Housing Law, since this has caused rental prices to “skyrocketed” by 13 percent and the supply to be reduced by 15 percent.

Temporary accommodation, referred to as alquiler temporal or alquiler de temporada in Spanish, is considered to be anything that’s longer than a month but shorter than a year, middle ground between short-term and long-term rentals. It is also referred to as monthly accommodation or seasonal accommodation.

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