Tax reform laid out by the regional government is viewed by many experts as more political signaling than a catalyst for real economic change. The consensus is that the measures are unlikely to meaningfully boost activity or consumption, and they may carry notable risks. Some fear a flight of capital or a drop in sales of homes and other luxury goods as individuals seek more favorable conditions elsewhere.
The head of the tax commission at the College of Economists notes that the plan includes a personal income tax cut for incomes below 65,000 euros annually and a planned increase for higher earners in 2023. While the changes are not expected to trigger major shifts in economic activity, they could broaden the tax base without delivering a substantial boost to growth.
Among the concerns is a 0.25% rise in the Wealth Tax in the final code sections, which could amplify capital outflows. Critics argue that Wealth Tax should no longer exist, as it has largely disappeared across Europe. Beyond that, some residents may consider relocating to other regions or seeking alternative instruments to reduce tax burdens.
Additionally, there will be a one-point increase in the National Transactions Tax for deals exceeding one million euros. This is seen as a possible deterrent to the purchase of luxury goods and real estate, a move that some observers say carries heavy fiscal implications.
Economist Ignacio Jiménez Raneda, a former rector of the University of Alicante, concurs that the impact on general activity will be minimal. He suggests that the government aims to project financial progressiveness to the national audience while preserving relief for lower incomes and avoiding undue penalties on the middle class.
He adds that the reforms offer limited stimulus for activity, presenting a redistribution bet that may appear as a political signal in election contexts, a common feature in policies adopted by various parties.
H2: Tax reform bill for high incomes: 50 million personal income tax, assets and transfers
Luis Chinchilla, president of the Valencian Community of Tax Advisors, believes the council is seeking to address inflation by adjusting the tax framework. He notes that the region’s top marginal rate for personal income tax sits around 54 percent, a level deemed too high to attract international residents and investors. There is skepticism about the rationale for offering deductions to incomes below 65,000 euros, especially given the established threshold that defines wealth. Chinchilla describes the measures as somewhat populist and argues they do not cultivate a culture of effort. He emphasizes that encouraging spending and consumption would be a more effective path for stimulating growth.
Business groups are divided in their reception of the reform. The Valencian Confederation of Business Associations (CEV) acknowledges the tax cuts for individuals but criticizes the persistence of the Inheritance Tax and the absence of targeted measures to support enterprises.
Navarro, the head of the business federation, argues that the reform signals that tax reductions are feasible and can stimulate private consumption amid high inflation and slowing growth. He notes that gradual reductions in personal income tax could benefit lower-income households over time.
Nevertheless, CEV criticizes the lack of accompanying support measures for companies. Navarro recalls a political pledge to shrink the inheritance tax base from 95 percent to 99 percent and to extend relief to all family-owned businesses, regardless of size, a promise that has not materialized. He suggests that future reforms should pair tax relief with practical steps to streamline public administration and curb the informal economy, enabling further fiscal restructuring and broader social measures to aid the productive sector.
Maite Antón, president of the Alicante Family Business Association, expresses cautious optimism that reform discussions might pivot toward changes that improve tax administration and policy clarity. She agrees with the CEV that more efficient governance and stronger measures against informal economic activity could pave the way for deeper tax reform and for broader social aids that support the productive economy.
Overall, the reform package is at a crossroads. It aims to ease tax pressure on lower and middle incomes while signaling fiscal discipline to the broader market. Observers stress that its ultimate success will depend on implementation details, how the incentive effects translate into actual spending and investment, and whether the government follows through with complementary policies to strengthen business competitiveness and consumer confidence. The debate continues as policymakers balance redistribution aims with the need to stimulate sustained growth across the region.