Junta cuts some taxes to boost the economy in Andalucía

Regional ministers Elías Bendodo and Juan Marín.
Regional ministers Elías Bendodo and Juan Marín. / EFE
  • Experts are confident that there will be no financial loss as every euro of reduction generates two to three of economic growth

The Junta de Andalucía is working on a package of measures with the aim of making Andalucía the region with the lowest fiscal pressure in Spain. On Tuesday the Andalusian parliament voted to introduce some of these changes by decree this year, without waiting for a new law, the Ley de Tributos Cedidos, to come into force next year.

The term 'Tributos Cedidos' refers to taxes which are established and regulated by the State, but which are collected and sometimes managed by regional governments.

The package of new measures will apply to six sections: personal income tax, wealth tax, inheritance and gift tax, tax on property transfers and documented legal acts, a special tax on certain means of transport and taxes on gaming.

The changes which will come into force this year are the reduction of the tax on property transfers and documented legal acts, and this is expected to benefit 275,000 people.

According to the Junta, this has been done to avoid a situation where a reduction which will benefit property buyers paralyses the market in the months until the new law comes into force.

The decree reduces the amount of tax which is applicable to property transfers and the tax which applies to notarised documents. For example, if one individual sells a property valued at 180,000 euros to another individual, there will be a saving of 1,800 euros in tax.

As the measure means the overall price of new-builds will be lower, it is also expected to encourage more people to consider buying these.

The Junta believes that as well as boosting the property market, it will attract new investors and increase consumption in general. It says the increased economic activity will benefit the tax authorities through increased revenue from income tax and IVA.

It is calculated that this fiscal reduction will mean a loss of 24 million euros to the tax authorities, but they are confident not only that this sum can be recovered but that the measures will result in more revenue. The vice-president of the Junta, Juan Marín, says the experience of previous tax reductions has shown that every euro of reduction generates between two and three euros of economic growth.