Isabel Díaz Ayuso, president of the Community of Madrid, has made reducing municipal and regional taxes a priority for her party. In an effort to fulfill this promise, the mayors of the People’s Party (PP) have begun implementing various fiscal measures, with a focus on reducing the Property Tax (IBI) and the Capital Gains Tax. These measures align with Ayuso’s political project, outlined in the PP’s electoral program, which emphasizes the importance of lowering taxes, maintaining budget stability, and removing obstacles for businesses in order to stimulate economic growth and job creation.
A recent report by the Institute of Economic Studies ranked Boadilla del Monte, governed by Javier Úbeda of the PP, as the municipality with the most competitive fiscal policy in the region. Other municipalities with PP mayors, such as Majadahonda, Paracuellos de Jarama, Alcobendas, and Las Rozas, also ranked high on the list. However, there are some differences among the mayors in their approaches to tax reduction. For instance, the socialist-led municipality of San Fernando de Henares implemented limited tax reductions while maintaining budget stability.
Boadilla del Monte, the most competitive municipality, has reduced the tax rate for the Urban Land Value Increment Tax (plusvalía) from 25% to 24%, aiming to alleviate the economic impact of the housing crisis on residents. The municipality also applies the minimum legal tax rate for most taxes and offers additional discounts, such as a reduced IBI rate. On the other hand, Majadahonda has focused on promoting environmental sustainability by providing tax incentives for the installation of solar panels and energy-efficient technologies.
Paracuellos del Jarama, governed by Jesús Muñoz of the PP, has recently approved a 30% IBI discount for the installation of solar panels. Despite budget constraints, the municipality has maintained the minimum tax rate for a population of over 30,000 inhabitants. These examples demonstrate the commitment of PP mayors to Ayuso’s agenda of tax reduction and economic growth.
In contrast, larger municipalities like Móstoles and Alcalá de Henares have lower fiscal competitiveness. Móstoles plans to lower the IBI and increase discounts for large families, while Alcalá de Henares has frozen taxes and fees and intends to reduce capital gains taxes and offer discounts for large families by 2025.
The Community of Madrid has also announced a new half-point reduction in the Regional Income Tax (IRPF) in the future, which will result in savings for millions of taxpayers. Mayor José Luis Martínez-Almeida of Madrid has announced a reduction in the Property Tax from 0.456% to 0.442% in 2024, resulting in significant savings for residents. The overall goal is to provide relief for taxpayers and stimulate economic growth in the region.
However, not all municipalities are following this trend. Navalcarnero, governed by the Spanish Socialist Workers’ Party (PSOE), has the highest tax burden in the region. Similarly, Rivas Vaciamadrid, governed by the United Left (IU), has implemented limited tax reductions. These municipalities serve as examples of the different approaches to fiscal policy within the region.
Overall, the reduction of municipal and regional taxes has become a rallying cry for the PP and its mayors. The goal is to create a competitive fiscal environment that attracts investment and promotes economic growth, ultimately benefiting the residents of the Community of Madrid.
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