Spain Announces Millionaire Tax

by Ulrika Lomas, Tax-News.com, Brussels

28 May 2010

Marking an about turn, and in a bid to rescue the state finances, Spain’s Prime Minister Jose Luis Rodriguez Zapatero has announced plans in the Madrid parliament to introduce a new tax on the country’s wealthy.

Bowing to increasing pressure from both the left and from trade unions, Zapatero has confirmed that a bill providing for the introduction of a new tax on millionaires is due to be submitted shortly. Eager to reassure the nation, the Socialist Prime Minister has emphasized that 99.99% of individuals will not be affected by the government’s latest decision.

Although precise details of the new tax have yet to be unveiled, Zapatero has, however, revealed that the proposed levy will apply to individuals with a large financial capacity.

The latest announcement nevertheless marks a clear u-turn by the government, which had only very recently rejected the idea of imposing a millionaire tax, with Zapatero explaining that the time was not right for such plans.

Determined to save around EUR15bn by 2011, the Spanish government has already presented its drastic savings programme, which includes a 5% reduction in public sector wages and a freeze on pensions. The fourth largest euro-zone economy aims to reduce its budget deficit from 11.2% last year to below the 3% European Union threshold by 2013.

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