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Spain’s Government Faces Twin Fights Over Housing Plan and Regional Financing Reform

Mounting resistance puts passage of the landlord tax break and the ERC-linked financing reform in doubt.

Overview

  • Finance minister María Jesús Montero outlined the new funding model at the CPFF, saying regions can opt in and detailing higher tax cessions to communities—IRPF rising to 55% and VAT to 56.5%—with roughly €21 billion in additional resources.
  • PP-led regions rejected the proposal as a deal prearranged with ERC and warned of possible legal action, while calling the plan a “precooked menu” that favors Catalonia.
  • Catalan officials defended the framework as fair and more transparent, arguing no region loses and estimating about €4.7 billion more for Catalonia, with most new money flowing to PP-governed territories.
  • The housing clash deepened after Pedro Sánchez announced a 100% personal income tax rebate for landlords who keep rents unchanged, which Sumar opposes after being informed minutes before the rollout.
  • Yolanda Díaz said Sumar will not back the rebate as designed and pushed measures like automatic extensions of expiring leases, as housing minister Isabel Rodríguez defended the plan and signaled parts of the package could be advanced separately in Congress.