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Municipal capital gains tax in Galicia: What can we learn to improve the fiscal capacity of this tax?

Author

Listed:
  • Vaquero García, Alberto
  • Santirso Fernández, Miguel Ángel

Abstract

The Tax on the Increase in Value of Urban Natural Land (IIVTNU), better known as the municipal capital gains tax has been one of the most questioned taxes due to the problems arising since its application and the continuous modifications as a result of the rulings of the Constitutional Court, which has led to its calculation being significantly changed. However, and despite the continuous reforms, the IIVTNU still has major problems that have not been corrected. In addition, no official estimates are available on the budgetary impact of the new regulation, nor does it seem that the General State Administration will pay any kind of compensation to the municipalities for the foreseeable loss of tax collection, as it is a fiscal capacity delegated to local entities. Finally, the IIVTNU has many more collection problems than other taxes such as the Property Tax or the Business Tax. This article addresses all these limitations and proposes a set of alternatives to improve the fiscal capacity of the IIVTNU, both generally and specifically for Galician municipalities.

Suggested Citation

  • Vaquero García, Alberto & Santirso Fernández, Miguel Ángel, 2023. "Municipal capital gains tax in Galicia: What can we learn to improve the fiscal capacity of this tax?," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 32(3), pages 1-23.
    • Handle: RePEc:sdo:regaec:v:32:y:2023:i:3_1
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    More about this item

    Keywords

    Municipal capital gain tax; Collection; Fiscal responsability; Fiscal capacity;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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