The government is nearing a definitive reform package in the Valencian Community that aims to adjust tax progressiveness for residents. The plan, shaped by the regional administration, includes a reduction in personal income tax for individuals earning up to sixty thousand euros, a proposal announced by the Generalitat leadership three weeks earlier. As the proposal stands, the executive, Compromís, and their partners in Unides Podem advocate for a higher burden on high earners and large net worth to offset revenue losses. Early discussions indicate agreement on three key measures: tweaks to income tax for top salaries, an adjustment to wealth tax, and changes to property transfer duties.
Negotiations among the three parties within the Regional Executive have progressed to the point where a final agreement could be sealed this Friday. This intent was stated by the vice president of the Consell in a public address after the plenary session held this Friday in Orihuela. He reiterated the aim to proceed with the changes during the plenary session, aligning with the plan laid out by Puig in a recent parliamentary control session. The Consell session scheduled for Monday is described as extraordinary in character, signaling a sense of urgency in the reform timetable.
Consell officials marked the occasion with coverage of their weekly plenary gathering in Orihuela. The event underscored the collaborative effort among the participating groups and their readiness to advance the reform package through the legislative process. According to sources, the wealth tax review would include a significant increase for cases involving assets exceeding one million euros, while the current wealth exemption threshold remains at five hundred thousand euros aside from habitual residence considerations. Regarding property transfers, the expected change would raise the rate from ten percent to eleven percent for residential deals above one million euros. Although the exact figures were still under discussion, Puig-led PSPV partners were prepared to accept upward adjustments to these three taxes, with a preliminary understanding in place by noon on Friday. The broader objective is to compensate for the income reductions arising from rent relief for incomes up to sixty thousand euros, with an estimated impact around 150 million euros.
The reform package tied to Botànic also seeks to reduce tax pressure on middle and low incomes while increasing taxes on higher earners. The approval of these measures is planned to unfold through two procedural routes: a tax relief decree enacted to address urgent needs stemming from the epidemic and inflationary pressures, and a broader package that may require changes to the regular budgeting framework. The decree’s retroactive scope would begin on January 1, 2022, and would incorporate proposals from the Housing and Bioclimatic Architecture department, including rent subsidies and housing purchase discounts for young people, along with incentives for real estate rehabilitation to facilitate housing access.
In parallel, the political opposition has pressed for additional scrutiny. PSOE representatives question Puig and Compromís on the pace and scope of the tax cuts and urge Podem to pursue higher taxes on higher incomes to maintain balance in the reform. The second phase of the reform is anticipated to be finalized on Monday, though its effects would begin in 2023. Jurisprudence cited by Generalitat officials suggests that retroactive tax measures could be permissible under certain legal frameworks, though some observers note that such changes will likely need to be enacted directly within the upcomingBudget Law for the following year. Regardless of the path, authorities emphasize that the Consell must approve the necessary measures before early November to ensure timely submission to the Valencian Parliament. (Attribution: Consell de la Generalitat)