The tax reform backed by Generalitat chief Ximo Puig has stirred unease among leading PSOE officials. Puig’s determination to lower the personal income tax for all earnings under 60,000 euros in the Valencian Community has unleashed criticism of the most influential socialist in the region. The baron, a figure who wields influence over the most populated area, faces resistance from government spokesperson Isabel Rodríguez and socialist spokesperson Patxi López in Congress this week. Nadia Calviño, the first vice president of the central executive, and other Puig allies were also in the spotlight. Salvador Illa, head of PSC, and other major allies of the autonomies in Spain observed how Puig’s tax-cut stance disrupted party unity. Feijóo’s PP capitalized on the moment to amplify the noise and push their narrative, even from Congress.
Nadia Calviño, the First Vice-President of the Government and Minister of Economic Affairs and Digital Transformation, criticized what she called downward competition in fiscal matters by some autonomous communities, especially those led by the PP. When asked about Puig’s announcement, she framed the central government’s fiscal policy as responsible in contrast to the approach of other autonomies.
Calviño rejected the PP’s disruptive and irresponsible financial proposal, arguing that its aim would be to shrink the welfare state. This response came during a government control session when a Popular Party MP pressed questions. She warned against a government that would fail or destroy the country, lamenting policies that inflate taxes or invent new ones.
Calviño stressed that while the economy continues to grow, the path forward must remain steady. She asserted that the government’s economic policy is the right course to sustain growth now and into the future. Regarding the PP’s proposals, she labeled them as an irresponsible and destructive fiscal policy that would undermine the welfare state and vowed that the government would not align with such plans.
She also noted that these proposals echo measures once seen in the United Kingdom, where tax cuts led to significant market reactions. The IMF and other international bodies have signaled concerns about rapid tax-cutting policies, Calviño observed, suggesting that similar recipes could be risky if applied elsewhere.
Rojas, a Popular Party member, argued that no government has created a more negative investment climate and suggested Puig’s tax reform would benefit lower earners while inviting political critique from party peers. Voices in the PP, including Isabel Díaz Ayuso and Cuca Gamarra, called for the government to adopt similar steps, reflecting the ongoing tension within national politics.
Calviño highlighted that regional tax competition often results in tax havens and weaker public services. She emphasized a strategy of selective, targeted tax reductions rather than sweeping cuts, insisting that reforms should aim to protect the most vulnerable and ensure that those who contribute the most play their part. The central government is pursuing reductions that reach all citizens while safeguarding the Welfare State.
The finance minister, Arcadi Spain, and fellow minister María Jesús Montero addressed the issue in public remarks, urging a calm, consistent approach. Montero rejected a spin of tax reductions sweeping across communities and cautioned against a spiral of fiscal decline. She warned that broad tax cuts tend to undermine public services and harm fiscal stability.
Montero pointed to examples in Madrid and Andalusia, where wealth taxes affect a tiny share of the population, to illustrate the consequences of large, indiscriminate tax cuts. She cited the English experience under Prime Minister Liz Truss as a cautionary tale and noted that esteemed international bodies, including the European Central Bank, the OECD, and the IMF, advise against large tax cuts. The recommended path is surgical, selective reductions that support those who bear the heaviest burden and protect public resources across the board.
calm discussion
On the insistence for a calm discussion among autonomous communities, officials urged consistency in proposals, stressing that most regions request more resources from the central government, funded by the same pool of citizen taxes.
Spain has urged alignment with wider European policies as it receives substantial European funds, arguing that inconsistent headlines about tax breaks do not reflect the broader fiscal picture. The welfare of citizens is at stake, and officials called for careful, measured policymaking.
In parallel, the Catalan Socialist Party leader noted that public resources must be sufficient to finance public policies. A shift towards regional confrontation would be counterproductive, as Puig presented the tax reform during a general policy debate in the Valencian Parliament and in other public forums, emphasizing the need to balance growth with social protections.
Overall, the debate centers on balancing tax policy with social welfare, ensuring consistent fiscal discipline while protecting essential public services. The central government remains committed to reforms that broaden fiscal capacity without sacrificing the welfare state. Consultations across regions continue, with emphasis on measured, evidence-based approaches that can withstand international scrutiny and align with long-term economic stability. [Source attribution: governmental and parliamentary briefings and economic policy analyses].