Why Sánchez’s PSOE Is Collapsing In Madrid

pedro alertado

T.C. | Why has Pedro Sánchez’s PSOE been swept aside in the Madrid elections on May 4th? Because, very much in his usual style, he waited until the 5th to announce to all Spaniards the content of the Recovery Plan sent to Brussels the previous week, with tax hikes on all fronts. So Spain has a government in which everything is about electoral calculation, deceit and contradiction. Something that, at least the people of Madrid, are tired of.

The 2,000 pages sent to Brussels, divided into 30 sections, attempt to justify how the money coming from Europe will be spent, and what reforms Spain is committed to carry out in exchange. Amongst them, of course, is a full-blown tax increase, which the government justifies as “adapting the tax system to the reality of the 21st century.” And in reality, it includes tax hikes across the board.

So, for example, just a few months after the cancellation of tolls on some Spanish motorways – a populist measure with enormous and logical repercussions – he announced in Brussels that as of 2024 “a payment for use of the road network” will be created. This will include motorways, until now free of charge. An increase in the tax on diesel and hydrocarbons from 2022. New taxes on drivers “in order to obtain more sustainable mobility.” A reform of the tax on fluorinated gases…

The government warns of the review and possible elimination of a dozen tax rebates that could increase revenue by 35 billion euros. And it has reneged on itself when it assures that the suppression of the bonus for joint taxation in marriages, which appears in the Plan sent to Brussels, is in reality “a mistake”?

It has announced tax harmonisation in view of “the need to apply taxation on wealth in a more coordinated way between the different territories in order to guarantee a minimum and coordinated level of taxation, avoiding harmful tax competition between the Autonomous Communities.” Which, translated, will mean from 2023 a tax increase on Inheritance and Donations for communities such as Madrid and the reestablishment of a tax on Patronage that only exists in Norway and Switzerland.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.