Taxation has become a central topic in regional electoral discussions, shaping the economy debate beyond party lines. In Valencia, right-leaning parties led by the PP advocate for broad tax reductions, while left-leaning groups push for energy self-sufficiency and a shift toward a technology-driven production model. The key question remains: what are the potential gains and drawbacks of these tax cuts? Experts diverge. Some argue that tax relief could spark economic activity, while others warn it might strain essential public services and deepen debt problems.
The regional campaign highlights what separates the right and left on economic policy. In an inflationary environment, promises to cut taxes have become a defining feature, often deployed as a political lever. The PP leads with a full tax reform, starting with personal income tax reductions in its program. The party highlights a proposed tax scale revision intended to benefit all income levels, especially lower earners, estimating a rate as low as 8.75 percent. The plan includes bonuses for people over 65, the self-employed, extended families, and individuals with disabilities, among other groups. It also proposes abolishing the Inheritance and Donation Tax up to the legal limit of 99 percent and a 10 percent reduction in Real Estate Transfer Tax depending on purchase price.
Ciudadanos endorses a similar path with incentives such as marriage savings up to €1,500 for families within the regional income band, an inheritance tax bonus, and a two-year tax exemption for self-employed individuals who do not reach the inter-professional minimum wage in the first two years of operation. Vox adopts comparable measures, pledging significant discounts on the same taxes along with Property Transfers.
Puig and other left-wing leaders in the Botànic Government do not significantly alter their fiscal programs. Their public statements emphasize targeted adjustments aimed at advancing progress and supporting the most vulnerable groups. Consequently, the election promises center on transforming the Valencia Community economy and boosting employment through structural reforms.
For PSPV, the strategy aligns with the Sagunto gigafactory project, focusing on strengthening new business initiatives in energy storage to position the Community as a European reference point. Initiatives include advancing the digitization of small and medium enterprises through Big Data, artificial intelligence, and remote work, plus a chip manufacturing project developed with industry partners and universities.
Compromís advocates converting the Valencia Institute of Finance into a public bank to assist the self-employed, SMEs, and social organizations. It also signals an €800 million investment to reinforce reindustrialization in Alicante regions, targeting sectors such as toys, textiles, and footwear to spur innovation and employment.
Unides Podem proposes a broad shift in the production model toward an ecologically oriented economy guided by environmental criteria. It recommends a law to curb relocation of publicly funded companies, easy loans to promote cooperatives, and new rules for Vocational Education to better fit the region’s workforce needs, alongside actions to foster youth employment.
less money
Experts weigh in on the tax proposals driving the debate. Carmen Herrero, Emeritus Professor of Economic Theory at the University of Alicante and a laureate of the Jaume I Prize in Economics, offers a direct assessment: tax cuts reduce public revenue and can lead to tighter utilities funding. She explains that tax relief can stimulate consumption by increasing disposable income, particularly for higher-income households, but warns this effect does not automatically reach lower-income families. Public services such as health and education remain essential, and if the state cannot fund them, private markets must fill the gap. The heavier emphasis on redistribution would aim to preserve or expand the welfare state while lowering taxes for those with greater means.
Paloma Taltavull, a professor of Applied Economic Analysis, adds that tax cuts imply smaller public budgets and increased borrowing. The question then becomes who pays for health, education, and other public goods. She notes that the European Union relaxed deficit rules during the pandemic but is returning to fiscal discipline, a factor policymakers should consider when designing tax policies.
Ignacio Jiménez Raneda, emeritus professor and former UA president, points out that tax cuts are often associated with the political right but can challenge service delivery. He references the Laffer curve idea but cautions that meaningful revenue gains require substantial rate reductions, which are unlikely in a region already facing high debt and tight funding.
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There are two paths in policy thinking. One side argues for more fiscal room to meet citizens’ needs, while the other emphasizes preserving public services even if taxes are lowered. The debate asks where the emphasis should lie, and how residents can best gain from policy choices.
Alfredo Masó, a UA professor of Fundamental Economic Analysis, questions the impact of tax cuts. He suggests that stimulating consumption at certain moments and encouraging investment through mobility can work, but the overall effect is uncertain because it reduces public revenue and may raise debt. In a region already deeply indebted, the priority should be securing stable financing rather than broad tax reductions.
sunken economy
Elche-based economist José María Gómez Gras offers a nuanced view. He notes that the right and left present contested theories, but tax relief could support activity in a period of rising costs. Reducing the tax burden might help revive consumption and, in turn, stimulate economic activity across sectors.
Álvaro Antón argues that the lack of stable funding is the root of higher fiscal pressure. He calls for harmonized taxation across communities to address inequalities and to ensure adequate public services are financed.
Despite differences, many experts agree on steering policy toward fostering new technologies. They stress the importance of digitalization, artificial intelligence, and energy efficiency. Carmen Herrero highlights the need for broader education in digital skills, noting that only a fraction of companies invest in workforce upskilling. Ignacio Jiménez Raneda adds that investing in technology can cushion potential employment downturns by creating new roles in the tech sector, provided that related activities align with market demand.